Hotel investments in Asia Pacific are not as high risk as they’re often considered, a new report has found.
According to IPD’s latest Asia Pacific Hotel Investment Index, which is sponsored by Jones Lang LaSalle (JLL), Asian hotel assets have delivered strong return in 2012, compared to retail and office space. For the 12 months to December 2012, Asia Pacific’s hotel property market recorded an annualised total return of 11.1%, with Asia (12.2%) slightly higher than Australia (9.5%).
Hong Kong was the top performer, delivering an annualised total return of 23.0% in 2012, while Japan and Singapore delivered returns of 5.5% and 6.0% respectively.
“Whilst trading performance in key markets entered a period of consolidation after recent growth years, 2013 has witnessed much greater deal volumes, providing real evidence of investor demand,” said Ed Fitch, Executive Vice President of JLL’s Hotels & Hospitality Group.
Fitch also revealed that hotel transaction volumes in Asia Pacific have grown 85% in the first half of 2013, with a further US$1.1 billion in the pipeline.
“In common with other sectors, investor demand remains very strong in Asia whilst the search for yield continues. We are seeing strong prices being paid and cap rates have arguably compressed, so we expect hotel returns to be supported by capital growth this year,” Ed added.
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