Region’s hotel investment hits a 5-year high
Print Edition
HOSPITALITY investment in the Asia Pacific reached a five-year high of US$12.83 billion in 2013, according to a report by global real estate consultancy Cushman & Wakefield.
The firm tracks 17 gateway cities and prime destinations in the region. A substantial amount was invested in core markets, with the Chinese mainland accounting for US$2.636 billion, or about one-fifth, of the total investment volume. Singapore was very close behind at US$2.634 billion, followed by Japan at US$2.61 billion and Australia at US$2.271 billion.
Hotel investments were widespread across the region, where emerging and non-core markets like Cambodia, and the Maldives saw assets changing hands.
“Hospitality investment volume in 2013 more than doubled since 2008 and could be attributed to the excess liquidity, the low borrowing costs and the region’s favorable tourism growth and outlook,” said Akshay Kulkarni, regional director of Cushman & Wakefield’s hospitality services for South Asia and Southeast Asia.
The cities monitored by the report are Singapore, Hong Kong, Tokyo, Bali, Seoul, Mumbai, National Capital Region (India), Bangkok, Shanghai, Jakarta, Kuala Lumpur, Beijing, Ho Chi Minh City, Sydney, Melbourne, Perth and Brisbane.
In the first half of 2014, total investment volume of hospitality assets reached US$5.203 billion across the region, an increase of 9.5 percent from same period a year earlier. While Japan, Singapore, China and Australia retained the most volume and constituted about 68.8 percent of the overall investment, emerging markets such as the Philippines, Malaysia, Sri Lanka and Indonesia experienced rising investment totals.
Notable transactions in the first six months of this year included the 5-star Park Hyatt in Melbourne, sold by GIC Pte Ltd to Hong Kong-based Fu Wah Group for US$120.5 million; Hilton Hua Hin Hotel, sold to Thai-listed Saha-Union PLC for US$98.9 million; and Sutera Harbor Resort at Kota Kinabalu, Malaysia, sold to SGX-listed GSH Corp. for US$275.7 million, according to the report.
For the whole year of 2014, Cushman & Wakefield expects the hospitality investment market to contract from 2013, with volume between US$9 billion and US$10.5 billion.
“We expect the balance of 2014 to equal or come close to last year’s level in terms of transactional activity,” Kulkarni said. “Japan has already seen significant investment volume and will undoubtedly improve further and lead the pack, due to strong corporate demand and greater investor optimism arising from Abe’s economic reforms. Meanwhile, lower hotel transaction volume is expected for Singapore this year, at least in the organized institutional side.”
The Chinese mainland registered investments of over US$1.5 billion in the first six months of this year, evidence of significant confidence in the markets and their potential. But given the current trading performances in key Chinese markets and the relative slowdown of the economy, investment volumes are expected to taper.
“Hotel assets in Singapore and Hong Kong have high selling prices per room due to the high earnings multiples and the potential for capital appreciation ahead while buyer competition for prime institutional quality assets in these two cities remains intense, as there is a shortage of such assets for sale,” Kulkarni said.
“For the Singapore market, it would be ideal to hold if your assets are of prime quality, as there is some room for additional asset appreciation, and in Hong Kong, smaller sized assets are highly sought after and can be repositioned with higher upside in rates and value.”
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