According to research by JLL Asia Pacific’s hotel transaction volumes are expected to increase by 25 to 30 per cent year-on-year to more than US$11 billion in 2019.
“Despite a cautious economic climate and wider political headwinds, hotels in Asia Pacific present an attractive yield profile amid booming tourism demand, in the context of falling interest rates and bond yields,” says Mike Batchelor, CEO, JLL Hotels & Hospitality Asia Pacific.
“Much demand this year has been buoyed by private equity firms, developers and domestic clients. This leads us to believe that 2019 will be the third most highly-transacted year in the past decade. To date, only 2017 and 2015 have surpassed the US$11 billion threshold.”
According to JLL, the first nine months of the year have already seen US$7.8 billion worth of hotel investments in the region. Thanks to Japan and its series of mega events such as the 2019 Rugby World Cup, 2020 Tokyo Olympic Games and 2025 World Expo, the country has reached close to US$3 billion of transaction volumes so far.
“These tourism drivers will boost the need for accommodation assets, with investors looking to capitalise on the wave of demand. Japan is the region’s top performing market and forecast to hit a record high of US$4 billion in transaction volumes this year,” adds Mr Batchelor.
Across the region, the hotel market outlook remains positive. Over in China, softening office leasing demand and sluggish retail sales have turned investors’ attention towards hotels, where trading performance has been resilient.
The report reveals that while domestic investors have been active in their home markets, particularly in Japan and China, there remains an influx of foreign investment looking to tap into the region’s strong tourism growth and high yields.
South Korea, for instance, has seen a spike in international investor interest in 2019. Overseas investors are gaining increasing access in a tightly-held market as more institutional investors look to exit their investments after the pre-specified hold periods.
Another recipient of continued foreign capital is the Maldives, as identified in the report. Its reputation as a sought-after tourist destination has attracted more than US$260 million in cross-border deals alone this year.
“As both overseas and domestic investors seek out higher yielding opportunities across Asia Pacific, the hospitality sector will continue to shine,” concludes Mr Ercan. “We’re confident that this investment momentum will continue to drive the region’s hotel transaction volumes going into 2020.”
For more information, please download Hotel Investment Highlights H2 2019 here