Asian hotel investment “strongest since financial crisis”

Grand Park Orchard was sold in Q3 2013
Grand Park Orchard was sold in Q3 2013

The total value of hotel transactions in Asia has jumped 145% this year, with 2013 set to become the strongest year for the industry since the global financial crisis.

The latest data from Jones Lang LaSalle’s Hotels & Hospitality Group (JLL) shows that investment in region’s hotel market has increased substantially in 2013, with hotel investment volumes reaching US$3.9 billion at the end of the third quarter 2013 – 145% higher than the same period in 2012. The quarter itself recorded a strong US$1.2bn of transactions, up 41% compared to the third quarter last year, and JLL said the industry is experiencing “its strongest year since the global financial crisis”.

Mike Batchelor, managing director of investment sales at JLL Hotels & Hospitality, said the growth was being driven by key markets like Singapore and Japan. In fact Singapore has accounted for 16% of total Asian hotel transactions this year.

“Hotel trading performance in Asia has experienced a significant turnaround over the past two years and nowhere more so than in Singapore. This quarter’s landmark transaction of the Grand Park Orchard Hotel and adjoining Knightsbridge retail podium heralded the single largest asset deal in the city’s history. Going forward, we are aware of approximately US$1.3bn in exchanged contracts that will contribute to a very strong pipeline over the remainder of the year,” Batchelor said.

JLL noted a “sense of optimism” among hotel investors in Asia, with price benchmarks climbing above their 2007 peaks in some countries. It also projected growth from emerging nations, including Thailand and the Maldives.

“As investor confidence in the region continues to rally, the availability of investment grade hotels is becoming increasingly scarce and, as a result, we are seeing buyers turn their attention towards markets such as Thailand, Seychelles and the Maldives. The Maldives is proving a particular hot-spot where contracts have just been exchanged on what will be our fourth transaction in the country in as little as two years,” Batchelor added.

JLL has also increased its regional full-year hotel sales forecast from US$3.5bn to US$5.5bn, which would confirm 2013 the strongest year since 2008.

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