Asia Pacific hotel investment volumes in the first half of this year climbed 13.2 percent to US$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 & 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.”
The top 10 single-asset transactions in the first six months of this year collectively amounted to almost US$1.7 billion. Japan led with US$2.1 billion, followed by Australia (US$278 million), Mainland China (US$252.6 million), Vietnam (US$237.6 million), Taiwan (US$217.6 million) and Thailand (US$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,” says Mark Durran, Managing Director, JLL’s Hotels & Hospitality Group in Australasia. “Investors are also expanding their focus to second-tier markets in search of higher yielding opportunities.”
Overall, domestic investors in the region dominated capital flows, accounting for 80 percent of all deals above US$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” says Mr Durran.
“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,” continues Mr Batchelor.
Asia Pacific Top 10 Single Asset Transactions first half 2016
1) Grand Pacific Le Daiba, Japan (US$604.7 million)
2) Grand Hi Lai Hotel, Koahsiung, Taiwan (US$190.1 million)*
3) Loisir Hotel Spa Tower Naha, Japan (US$176 million)
4) Urawa Royal Pines Hotel, Japan (US$159.6 million)
5) Westin Resort Guam, Tumon, Guam (US$125 million)
6) Somerset Zhong Guan Cun Beijing, China (US$92.5 million)
7) The Mosaic Collection Grand Pujian Residence, Shanghai, China (US$ 86.4 million)
8) Hotel Route Inn Gotanda, Tokyo, Japan (Confidential)
9) InterContinental Asiana Saigon, Ho Chi Minh City, Vietnam (US$74.9 million)*
10) Hotel Sunroute Shinagawa Seaside, Tokyo, Japan (Confidential)
*Allocated price for the hotel component (excludes the department store)
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