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Hotel transactions remain strong in Asia Pacific
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The transaction volume for investment in Asia Pacific hotels was strong in the second quarter of 2015 with Singaporean and Chinese mainland investors being the most active, international real estate advisor Savills said in a report.
Forty-one deals in 11 countries worth more than US$1.95 billion combined were recorded between April and June, according to the Asia Pacific Hotel Sales & Investment Report. For the first half, the overall transaction value reached US$3.02 billion. That, however, represented a year-on-year decrease of 32 percent.
Across the region, investors from Singapore spent US$587 million, accounting for 30 percent of all investment sales accomplished during the three-month period. Chinese mainland investors followed with a 23-percent share, while China’s Hong Kong and Japanese investors both contributed 14 percent.
China: Outbound investment remained strong despite weakened macroeconomic outlook
Only one transaction occurred in the Chinese mainland in the second quarter. The MixC hotel project in Shanghai was sold by a joint venture between China Resources Land and Shanghai Shentong Metro Group to Hong Kong’s Shun Tak Holdings. In the first six months of 2015, Chinese mainland investors were the third most active in the region, representing 17 percent of Asia Pacific hotel transactions.
The macroeconomic outlook has weakened since the government set the GDP growth forecast at 7 percent, the lowest rate in 11 years. Macroeconomic conditions in China may suppress Chinese appetite for overseas assets, or conversely, investors may increase foreign investments to diversify risk.
Australasia: Australia was the strongest market for hotel transactions
Australia was the strongest market for hotel transactions, with 60 percent of all Asia Pacific transactions in the second quarter of 2015. Two iconic hotels, the Hilton Sydney and Westin Sydney, were sold during the period. The 579-room Hilton was acquired by Bright Ruby Resources from Hilton Worldwide for A$442 million (US$308 million).
The Westin is in the process of being jointly acquired by Far East Land and Sino Land Company, from the Government of Singapore Investment Corporation for A$445 million. The two buyers were Chinese and Singaporean, respectively. This further strengthens the trend of Asian investors continuing to favor Australian assets due to the country’s stable investment environment and strong growth in Asian visitor arrivals.
Southeast Asia: Singaporean investors were the most active in Asia Pacific
Hotel investment activity in Southeast Asia reached nearly US$200 million in the April-June period and for the first half, the total transaction volume hit US$446 million or 13 percent of all Asia Pacific transactions, however this is an annualized decrease of 52 percent.
Between the first six months of 2015, only Vietnam recorded a small increase in transaction volumes at 2 percent, while other countries with transactions saw decreases. By origin of purchaser, Singaporean investors were the most active in the first half, spending US$822 million.
Japan: Strong hotel investment market fueled by positive tourism and hospitality industry sentiment
The second quarter of 2015 continued to see a strong transaction market in Japan, with 11 hotels sold for a total of 33.3 billion yen (US$268 million). Sentiment in Japan’s tourism and hospitality industry remained extremely positive.
By purchaser origin, Japanese investors represented 13.8 percent of Asia Pacific hotel transactions, totalling US$804 million.
“Accounting for 73 percent of all investment sales in the Asia Pacific region in the first half, Japan and Australia remain the most attractive markets for Asian investors,” said James MacDonald, head of Savills China Research.
“We believe that an additional number of portfolios and single hotel assets will be transacted by the end of 2015,” he added.
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