Asia Pacific hotel investment volumes in the first half of this year climbed 13.2 per cent to USD$3.8 billion compared to the same period last year as yields recovered to pre-global financial crisis levels, according to a report by real estate consultancy JLL.
During the first six months of this year, a total of 14,025 keys traded across the Asia Pacific region, higher than the 10,976 keys achieved over the same period a year ago, according to JLL’s Hotel Investment Highlights report. Japan lent considerable weight to the rankings, representing five out of the top 10 deals transacted during the period. In total, JLL recorded 59 transactions in 11 countries.
“Looking forward, there remains a weight of capital chasing quality real estate assets,” says Mike Batchelor, Managing Director for JLL’s Hotels and Hospitality Group Asia Pacific.
“Whilst the investment environment is expected to be dominated by Japan for the remainder of 2016, deal flow should remain robust supported by stronger buying activity in Thailand, Vietnam, Korea and Myanmar,” he said.
The top 10 single-asset transactions in the first six months of this year collectively amounted to almost USD$1.7 billion. Japan led with USD$2.1 billion, followed by Australia (USD$278 million), Mainland China (USD$252.6 million), Vietnam (USD$237.6 million), Taiwan (USD$217.6 million) and Thailand (USD$138.3 million).
“Despite the relatively sharp pricing in first-tier cities, there remains significant appetite from investors for deals in markets with strong domestic and international visitation fundamentals,” said Mark Durran, Managing Director, JLL’s Hotels and Hospitality Group in Australasia.
“Investors are also expanding their focus to second-tier markets in search of higher yielding opportunities,” he said.
Overall, domestic investors in the region dominated capital flows, accounting for 80 percent of all deals above USD$5 million. Australasia continues to attract the highest capital inflows with cross border investors emerging as the dominant purchasers of hotel real estate over recent years.
“Asian buyers continue to be attracted by relatively higher property yields and the safe haven of proven investment markets in Australia and New Zealand. Long term visitor growth from China remains an important investment theme in Australia,” Durran said.
Batchelor added: “Following Brexit, the weaker British Pound may impact outbound travel from the UK, however, Chinese travelers remain a key contributor to tourism in this part of the world.”