Asian hotel investment up 218%

Hotel investment in Asia reached US$7.5 billion at the end of 2013, up 218% on 2012, but 2014 is likely to see fewer sales and purchases due to limited supply, according to an international consulting firm.

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JLL’s Hotels & Hospitality Group found that the value of hotel transactions in 2013 beat all industry expectations, making it the strongest year since the global financial crisis in 2007, when transactions were worth $10.3 billion.

Singapore, Japan and Mainland China led the region’s growth in 2013 with Japan topping overall investment volumes at $2.7 billion, up 480% year-on-year, as hotel trading performance improved in line with the expansion of the domestic economy and renewed growth in corporate and leisure travel. 

The year 2013 was also the best on record for the Singapore hotel market with capital values reaching new highs, resulting in transaction volumes of $2.0 billion, more than 10 times that recorded in 2012, predominantly supported by the sale of Grand Park Orchard hotel and Knightsbridge retail, the City’s largest single asset transaction to date.

In third place, China accounted for around 13% of total investment activity, recording $1.1 billion of transactions, as recent government announcements to improve access to financing drove investor sentiment over the second half of 2013.

Other markets that experienced strong growth in the region as a result of improved connectivity and burgeoning outbound travel from mainland China, include Hong Kong, which recorded $486.7 million, up 19% year-on-year, Thailand, which recorded $337.0 million, up 31% year-on-year and the Maldives, which recorded $267.6 million, up 614% on 2012.

Mike Batchelor, managing director at JLL’s Hotels & Hospitality Group, said strong investor sentiment and the availability of quality hotel assets were key reasons behind Asia’s impressive sales volume in 2013, which was hindered only by the availability of additional stock, as owners increasingly hold off selling assets in anticipation of further market growth.

“There remains no shortage of capital to be invested into the sector in 2014 - mostly from interregional Asian investors,” he said. "While overall deal flow will remain robust, we expect volumes to moderate in 2014 because of fewer landmark transactions and portfolio deals in the key gateway locations."

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