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Hotel investment volumes expected to reach $8.5 billion in Asia Pacific in 2016, says JLL report

Follows record sales activity in the region in 2015


​​​​​​​​Singapore, 4 February 2016 – A report released by JLL Hotels & Hospitality Group reveals that Asia Pacific is expected to be home to a significant US $8.5 billion in hotel investment in 2016.

Scott Hetherington, CEO, JLL Hotels & Hospitality, Asia, says: "In 2015, the headlines featured blockbuster acquisitions of high-profile, gateway market hotels by investors from mainland China, Hong Kong and the Middle East. We also saw a high volume of hotel deals in Japan with increasing interest from foreign investors. This year, we expect transaction activity across the region will slow somewhat, with a likely to shift to secondary markets in Southeast Asia and the Indian Ocean."

In 2015 more than 33,000 hotel rooms changed hands in Asia Pacific, adding up to a total of US $9.2 billion in transactions. Leading the pack in terms of investment activity was Japan, followed by Australia and Hong Kong. The blockbuster transactions that characterised as the year included the sale of the InterContinental Hong Kong for $938 million and the Westin Sydney for AUD 445m, as well as an increasing weight of money coming from investment and private equity funds.

Cross border investment accounted for half of all capital flows in the region on deals above $5 million, with Chinese investors increasing their stakes in Australia and Japan.

Looking ahead, JLL's Hotel Investment Outlook report identifies seven trends to look out for in Asia Pacific in 2016:

1.     Continued consolidation among hotel brands

2015 saw Marriott purchase Starwood and Accor acquire the Fairmont hotels group. Both these deals will impact the operating landscape in Asia Pacific and globally, with more consolidation expected in the coming year.

Mark Wynne Smith, Global CEO, JLL's Hotels & Hospitality Group, says: "Public markets are rewarding growth, creating a strong case for hotel brand consolidation. Hotel brands are on a never-ending quest to bolster their pipeline and with the natural attrition in properties and limits to new supply growth, the surest way is often by acquiring operators with strategic management or franchise contracts."

 

 

2.     Spotlight on Japan

Japan saw the highest deal volumes in the region in 2015, a trend that is expected to continue in 2016. This will comprise a substantial number of domestic REITs in addition to interest from US Private Equity funds and Southeast Asian families. There is likely to be increased demand from Chinese investors looking to purchase hotels in second tier Japanese markets through 2016.

 

3.     Investment into Chinese hotels

Mainland China has started to see circa. $1 billion in hotel trades annually and this level is expected to continue if not increase in 2016. While Chinese investors acquiring hotels continue to make headlines, quality assets listed within the Mainland are sure to attract interest.

 

4.     Australia will remain competitive

According to Craig Collins, CEO, JLL Hotels & Hospitality, Australasia, "2015 saw further growth in offshore interest in Australian hotel assets and we expect this to continue in 2016. Following several trophy asset transactions occurring in the past two years, interest remains strong for prime offerings across Australia's core markets. With a widely expected scarcity of available stock moving forward competition will be incredibly strong in 2016 for opportunities to enter the coveted Sydney and Melbourne markets in particular."

5.     Hong Kong and Singapore will be less active than 2015

Investors will continue to look at these established financial centres. However, lack of available assets in Hong Kong – which saw its highest number of transactions ever in 2015 – will make it competitive. Similarly the tightly-held hotel stock in Singapore will mean any opportunities will be highly sought-after.

6.     Increasing interest in secondary markets

There will be pockets of liquidity across Southeast Asia and the Indian Ocean with interesting investment opportunities coming up in markets such as Thailand, the Maldives and Mauritius.

7.     REITs will be on the rise

In Asia there remains the opportunity for the formation of more hotel real estate investment trusts (REITs) if tax structures change to offer similar benefits to those seen in the US.

For more information, download JLL Hotels & Hospitality Group's Asia Pacific Hotel Investment Highlights H2 2015 and Hotel Investment Outlook 2016. Watch our Hotel Investment Outlook 2016 video here.

 

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Notes to Editors:

JLL's Hotels & Hospitality Group has completed more transactions than any other hotels and hospitality real estate advisor over the last five years, totalling more than $68 billion worldwide.

Between negotiating the world's most extraordinary, enticing, and profitable property deals, the group's 350-strong global team also closed more than 4,400 advisory, valuation and asset management assignments.

Investors worldwide turn to JLL to shape their strategies, tailor their portfolios and maximize the value of their assets. We are recognized as the global leader in real estate services across hospitality properties of all shapes and sizes. Our expert advice is backed by industry-leading research.

We apply our broad spectrum of hotel valuation, brokerage, asset management and consultancy services through every phase of the hotel lifecycle. We have helped more hotel investors, owners and operators achieve high returns on their assets than any other real estate advisor in the world.

Whether you are looking for a hotel or you're ready to sell, we'll use our capital markets expertise, hospitality industry knowledge and global relationships to put the right parties together and execute a bespoke deal that exceeds your objectives.

To find out more, talk to JLL.