The latest “Asia Hotel Investment (H1 2013)” report shows that the solid growth in sales activity marks the region’s strongest first half year since H1 2008.
Weight of investment into the established tourism markets of Singapore, Hong Kong and Tokyo, coupled with opportunistic deals in emerging markets such as Thailand and the Maldives was predominately responsible for driving growth in the region.
Mike Batchelor, Managing Director Investment Sales, Hotels & Hospitality, Jones Lang LaSalle said, “Throughout Asia, we are also aware of circa USD400 million in hotel transaction volumes to be confirmed soon and a further USD1 billion in due diligence.”
Japan’s hotel market received 37 percent of regional investment, driven by strong domestic, corporate and leisure demand following the widespread view that local market fundamentals had improved since the 2011 earthquake. Following closely, Singapore accounted for 34 percent of regional transactions, largely due to the sale of Park Hotel Clarke Quay for USD 238 million. Despite a somewhat unpredictable investment environment, Thailand continued to consolidate its position as one of Asia’s hotel investment hotspots, most notably with the Q1 2013 sale of the Laguna Beach Resort in Phuket.
Batchelor continued, “During the first half of 2013, we have seen a growing number of transactions, including those at the portfolio level, and improved investor sentiment translate to increased sales. The divergence between vendor and purchaser expectations that served to restrict investment activity in 2012, has improved this year leading to a number of landmark transactions in the first half.”
The report identifies funds, institutions and large corporates looking to restructure their portfolios, as the most prominent sellers of investment grade hotels while REITS, hotel operators and institutional investors were the most active buyer groups. However, despite the regional growth and strong investor appetite, the limited pipeline of open market listings throughout Southeast Asia has limited sales activity.
“Looking forward, the availability of investment grade assets in key cities and the growing insistence of sellers to close deals through transparent processes will dictate the overall investment landscape in the region as investors increasingly look to emerging markets. The Maldives, in particular, is a market in which we are seeing increased sales activity, including the recent sale of Angsana Velavaru for USD 71 million. We anticipate this trend to continue over the next 12 months.”
“As superannuation and other forms of capital continue to flow into REITs, we are likely to see their continued dominance in the market. This, coupled with the growing appetite of Asian private investors, owner operators and private equity players, could result in transaction volumes nearing USD3.5 billion by the end of 2013”, Batchelor concluded.
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