The number of trophy hotel assets changing hands
in Asia Pacific has surged in 2015 to levels unseen before,
according to JLL’s Hotels & Hospitality Group, which last month
Asia Pacific’s largest ever single hotel transaction, the US$938
million InterContinental Hong Kong.
As at the end of September, there have been six
recorded transactions of single assets trading in 2015, each with
a value exceeding US$300 million, according to JLL.
Mike Batchelor, Managing Director of
Investment Sales, who led the landmark InterContinental
transaction, said, “Historically we see one to two transactions a
year in this ‘mega category’ due primarily to the ownership
profile of trophy hotels across the region, which have often been
built and, in many cases, still owned by the original family or a
related entity. Assets tend to be passed from one generation to
the next and are rarely offered to the market.”
Hotel operators have been an exception to the
trend and in 2015 have continued to pursue their asset light
strategies, capitalising on the demand for trophy properties.
In July, Hilton sold their Sydney hotel under a
long term management agreement, similar to InterContinental Hong
The profile of investors historically attracted
to such opportunities has almost exclusively been the domain of
sovereign wealth funds or high net worth individuals, who tend to
hold the assets as part of a wider regional and global diversified
property portfolio. In recent times, however, this buyer pool has
been widening to now include Chinese insurance companies and
private equity firms backed by ‘core’ funds who are also prepared
to trade off the lower returns such investments offer.
The lower returns are offset by the long term
growth prospects that high barriers of entry provide to
replicating such trophy assets. The landmark properties are almost
always located in very hard to replicate triple-A locations in the
region’s key gateway cities.
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