Asia Pacific is the only region expecting growth
in hotel transaction volumes this year, according to JLL’s latest
Hotel Investment Outlook report.
The global real estate consultant
anticipates total transaction volumes for Asia Pacific to reach
$9.5 billion in 2019, a 15% lift compared to 2018.
Last year, transaction activity was fueled by
single-asset trades, which drove more than 83% of the total US$8.3
billion invested into the region. Developers and private equity
firms were the biggest buyers, acquiring more than half of all the
Building on 2018, investment momentum is
expected to accelerate as investors look to sell assets and ride
the anticipated tourism boom, especially in Japan and Singapore.The most notable buyers will be Pan-Asian private equity funds
that raised capital last year but have yet to deploy it. Listed
REITs, particularly Japanese REITs, will look to Asia’s most
liquid markets for purchases, while conglomerates and
owner/occupiers will buy selectively in key markets.
“Despite a series of natural disasters, Japan’s
hotel market captured investor interest globally. Nearly 30% of
all investment into Asia Pacific was in Japan, overtaking China
for the top spot,” said Nihat Ercan, Head of Hotel Investment
Sales Asia for JLL’s Hotel & Hospitality Group.
According to the report, investor sentiment in
Japan will remain buoyed by the
Rugby World Cup and the Tokyo Olympics – the market has
already seen an 8.7% growth in tourism year-on-year.
Singapore’s hotel market pulled in 7% more tourists last year,
driving positive RevPAR increases across all chain scales.
China, tourism demand outstrips supply -- JLL tracked record high
growth in RevPAR across major Chinese cities in 2018, including
Chengdu up 20%, Beijing up 15%, Chongqing up 13% and Wuhan up 12%.
“While we remain in a late-cycle environment
where yields remain low with limited potential for further
compression, most investors do not see a major downturn coming.
After a subdued final quarter in 2018, enquiries and deal making
have perked up at the beginning of the year. Interest rates are
now stabilised, so investors can focus on income growth and in
markets where fundamentals remain strong,” concluded Ercan.
JLL expects investors looking at Asia Pacific
will factor into their valuation assumptions less upside in
income; however, liquidity across key cities and lower return
requirements will drive transaction volumes. On the global front,
hotel occupancy rates and underlying property performance will
remain strong while travel and tourism are slated for another
record year. Investors seeking more yield are increasingly turning
their sights toward hotels amid slower economic growth projections
and geopolitical uncertainty.
“Investment activity exceeded expectation in
2018 and we believe 2019 will be another strong year for global
hotel investment, with a significant amount of debt and equity
liquidity and competitive bidding for assets, given continued
strength in fundamentals,” said Mark Wynne-Smith, Global CEO, JLL
Hotels & Hospitality. “Notwithstanding the more cautious backdrop,
ongoing large portfolio and entity-level activity, hotels’
attractive yield profile and record levels of dry powder will
drive global hotel investment momentum.”
Over the last five years, JLL’s Hotels &
Hospitality Group has completed transactions totalling more than
$63.2 billion worldwide. The group’s 350-strong global team in
over 20 countries also closed more than 5,420 advisory, valuation
and asset management assignments.
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