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Latest IPD Asia Pacific Hotel Property Index reveals
Singapore, 20 March 2013 – Asia Pacific hotel property assets showed a total annualised return of 7.7 percent for the year ending December 2012, according to the latest IPD Asia Pacific Hotel Property Index sponsored by Jones Lang LaSalle and Ryan Lawyers. This was comprised of 7.5 percent income return and a positive 0.2 percent capital growth.
The December 2012 total return was 620 basis points lower than the previous year of 13.9 percent, and is a reflection of the subdued Japanese market, a slowdown in Revenue Per Available Room (RevPAR) growth in Asia Pacific, and a softening in the Australian market fundamentals.
“Given the strong performance in 2010 and 2011, a slight moderation in returns is unsurprising. That said, hotel investments are still offering healthy returns,” said Ed Fitch, Executive Vice President, Jones Lang LaSalle’s Hotels and Hospitality Group. “Looking forward, investor appetite remains buoyant and we expect hotel transaction volumes to increase in 2013. We have already seen a significant number of transactions in gateway markets in Asia in the first quarter, and recent deals suggest stronger pricing. In that respect, we may expect to see capital growth driving hotel returns in the near future.”
Dr Anthony De Francesco, Managing Director of IPD Australia and New Zealand said: “The lower investment returns experienced across Asia Pacific hotel markets reflect a slowdown in RevPAR growth. This is no surprise given occupancy and average room rates are reaching pre-GFC levels and, as such, cannot sustain previous growth. While market fundamentals are likely to remain solid throughout 2013, strengthening investor interest in the hotel sector is likely to see some firming in cap rates for good quality hotel assets in desirable locations.”
Tony Ryan, Principal of Ryan Lawyers Singapore added, “While hotel performance remains strong, the rate of growth is moderating as hotels reach pre GFC levels. Hotel developments, in particular mixed use projects, are now very much an option in most Asian markets.”
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Notes to editors
IPD provides real estate benchmarking and portfolio analysis services to clients in over 30 countries around the world. These services incorporate more than 1,500 funds containing nearly 70,000 assets, with a total capital value of over USD 1.4 trillion. Each year, IPD produces more than 120 indices helping real estate market transparency and performance comparisons, as well as nearly 600 benchmarks for client portfolios. IPD is a subsidiary of MSCI Inc., a leading provider of investment decision support tools to investors globally, and clients include real estate investors, managers, consultants, lenders and occupiers. For further information on IPD, please visit www.ipd.com.
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 2.6 billion square feet. Its investment management business, LaSalle Investment Management, has $47.0 billion of real estate assets under management. Jones Lang LaSalle has over 50 years of experience in Asia Pacific, with over 25,100 employees operating in 78 offices in 14 countries across the region. The firm was named ‘Best Property Consultancy’ in nine Asia Pacific countries at the International Property Awards Asia Pacific 2012, in association with HSBC, and was named the number one real estate advisory firm in Asia Pacific in the Euromoney Real Estate Awards 2012.
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