In 2017, the top target markets for hotel investors were Hong Kong and Australia.
According to JLL, Asia hotel investors concentrated on gateway cities such as Hong Kong, Singapore, Sydney, and Melbourne during the first half of 2017 because they deliver positive tourism and trading fundamentals while long-term demand and supply are in balance. Investors are also looking for opportunistic opportunities in key emerging tourism markets like Vietnam.
In the first half of 2017, Asia Pacific hotel investment totaled just over $2.9 billion, with a scarcity of investment-grade hotels on the market relative to previous years. JLL reported 28 hotel deals totaling over 5,000 keys across six nations, with the average price per key of all transactions coming in at $486,600. qatar properties
In many major cities, Airbnb and other alternative lodging operators have wreaked havoc on hotel results. Illegal operators will be illegal in Japan starting in 2018, according to a bill passed by the National Diet of Japan in June 2017.
With just a few big ticket deals recently on the market, no Japanese transactions made it into the Top 10 single-asset transactions list for the first time since 2013. Portfolio sales, on the other hand, remain hotly contested in Japan, and the country’s long-term tourism outlook remains bright, thanks to the upcoming Summer Olympics in 2020.
“Hong Kong and Australia have been the region’s standout markets in terms of inbound investment, totaling just under $1.5 billion, led by strong tourism growth and good trading performance driving investment activity in Australia,” says Frank Sorgiovanni, JLL Hotels & Hospitality Group’s Head of Research, Asia Pacific.
With many buying opportunities recently coming onto the market, Australia remained a firm favorite for Asian-based hotel investors. The Australian hotel investment market remained involved, with a number of significant transactions taking place in Sydney and Melbourne. With the exception of the InterContinental Sydney Double Bay, which sold for $104 million, the highest price ever paid for a suburban hotel in Sydney, the majority of transactions took place in Melbourne. The property was purchased by a group of investors from China.
The newly opened International Convention Centre will offer Sydney’s hotel trading success and MICE industry a boost, and new supply is on the way, which will be welcomed as the city’s marketwide occupancy remains near capacity.
“Given the low interest rate setting, sound economic growth outlook, and weaker Australian dollar, hotel transaction activity in Australia is expected to continue throughout the year,” Mr Sorgiovanni adds. “However, opportunities to acquire hotels in many gateway Asian destinations are small, and investors are increasingly looking for alternative investments in emerging markets such as Vietnam or Cambodia, where Chinese tourism is driving arrivals growth.”
Following the recent rebranding of The Nam Hai in Hoi An, which is now managed by Four Seasons, a growing number of resort locations are expected to attract greater interest from foreign hotel operators, while investors continue to circle for deals. “We remain optimistic about Vietnam’s rising tourism and booming economy, which has drawn foreign investors from all over the region to the country’s hotel and resort market in the last 18 months. The nation has become one of Asia Pacific’s most talked-about markets “Mr. Sorgiovanni explains.