Asia Pacific hotel transaction volumes are projected to reach US$3.5 billion in 2013 thanks to strong investment sentiment to buy hotel assets in the region, according to Jones Lang LaSalle’s latest Hotel Investment Outlook report.
This projection represents an improvement on 2012 volumes, where hotel sales activity dropped 30% from the previous year, to US$3.3billion.
Australia and Japan are expected to see the lion’s share of investment dollars this year, while pockets of activity will be seen across the rest of the region.
Investor appetite for acquisitions is strongest for Phuket, Ho Chi Minh City, Auckland, Osaka and Tokyo; Asia Pacific hotel markets also continue to rank among the highest globally for development sentiment, with Bali, New Delhi and Mumbai appearing in the global top 10.
Despite strong investor sentiment, however, a low level of established product for sale will widen the pricing gap between buyers and sellers and slow the pace of transaction volumes. In light of this, investors will continue to consider new developments in order to achieve sufficient scale across the region. Hotel supply in Asia is projected to increase by an average of 5.5%per annum across 23 major markets over the next two years.
“While we are seeing strong investor appetite, sell intentions in Asia Pacific are the lowest of all the regions,” said Scott Hetherington, CEO, Jones Lang LaSalle Hotels and Hospitality Asia. “This is attributed to a softening of yield and leveraged initial rate of return expectations. Consequently, we expect transactions of existing assets to be broadly consistent with 2012 next year and pick up in 2014. The exception is Southeast Asia, which is exhibiting strong trading sentiment, healthy RevPAR growth and new investment-grade product.”