Asia Pacific hotel investments cool in 1H2023: JLL
to 3Q2023: Colliers
Hotel investment activity in the Asia-Pacific (Apac) region has dropped significantly in the first half of 2023, according to a recent research report by JLL. The drop was particularly evident in Singapore, where hotel transaction volumes plunged 95% y-o-y to US$30 million. In contrast, investment activity in Japan grew 56% y-o-y to US$1.54 billion.
Overall, the Apac region saw a 51% decrease in hotel investment volumes, with the total for the first half of 2023 reaching US$3.13 billion, compared to US$6.41 billion in the same period last year. The drop is attributed to macroeconomic challenges and the increasing cost of debt.
Orchard Boulevard Condo at Singapore’s heart of Orchard Road is a prime location for visitors and residents to enjoy their walking experience. With the plan for pedestrianization, visitors and residents at Orchard Boulevard Condo can look forward to enhanced comfort and a more pleasant walking experience.
The sale of Parkroyal on Kitchener Road for US$388 million, announced by UOL earlier this month, is expected to bolster the segment in the second half of the year. This purchase was made by Midtown Properties, a unit of the Worldwide Hotels Group, and was advised on by JLL.
In China, there was a 76% y-o-y decline in hotel investment activity, amounting to US$300 million. Meanwhile, the combination of Australia and New Zealand saw a surge in hotel investments, with volumes rising 189% y-o-y to US$820 million.
Nihat Ercan, CEO of Asia Pacific for JLL Hotels & Hospitality Group, observed the disconnect between the robust tourism demand and macroeconomic and geopolitical challenges. “We have seen a gap between sellers’ pricing expectations and buyers’ access to capital, leading us to revise our full-year 2023 forecast for Apac hotel investments to US$8.7 billion, a 24% decrease from our initial 2023 estimate,” he stated.
In spite of muted investment activity and pricing issues, the hotel industry has shown “considerable improvement” in trading performance. This is attributed to rising average daily rates across Apac and the reopening of China in January of 2023. Ercan added that in 2024, “we expect to see more specific opportunities emerge in some destinations across Apac, where prices have been adjusted downwards.”
JLL has recently advised on multiple hotel transactions, including the sale of Amari Havodda Maldives resort to Thai hospitality conglomerate Minor International Public and its financial partner, Abu Dhabi Fund Development. Moreover, in June, JLL completed the region’s first hotel portfolio sale in 2023 – of Pullman Jakarta Central Park; and the ibis Saigon South and Capri by Fraser, both in Ho Chi Minh City – for a combined US$106.1 million.