Asia Pacific hotel deals tops $ 5 b in Jan.-Sept.

Asia Pacific hotel transaction volumes reached $ 5.2 billion for the first three quarters of 2018, down 28% year-on-year, according to Nihat Ercan, Managing Director, Head of Investment Sales, Asia, JLL Hotels and Hospitality.

 Rising interest rates affected investor sentiment, resulting in smaller deal sizes despite more hotel properties changing hands compared to the same period last year.

Across Asia Pacific, private equity firms and property companies were the biggest investors in hotels at US$1.6 billion and US$1.5 billion respectively for the year to September. Seven out of ten hotel properties sold in the region were located in China, Japan and South Korea.

The hotel industry continues to boom in Japan, with the number of international visitors reaching a new high. The government has doubled its inbound tourism target to reach 40 million by 2020, when the Summer Olympic Games takes place in Tokyo. Transactions in Japan consisted of mainly limited-service hotels located in Sapporo, Tokyo, Osaka and Fukuoka. Japan REITs were relatively active in 2018, accounting for almost 20% of hotel transactions.

“Existing hotel owners in Japan are generally adopting a wait-and-see approach in light of the upcoming 2019 Rugby World Cup and the 2020 Tokyo Olympic Games. We expect transactions of full-service hotels to be limited in the next two years, with mid-sized developments of leased limited-service hotels located in Tokyo, Kyoto and Osaka likely to be available upon completion. Japanese investors are also setting their sights on emerging markets such as Vietnam, Maldives and the Philippines,” says Ercan.

In South Korea, foreign investor interest is expected to continue despite the decline in Chinese visitors last year as a result of geopolitical tensions.

“South Korea’s tourism market has remained resilient despite the decline in Chinese visitors. The shortfall has been filled by a growth in visitors from secondary source markets in Southeast Asia. Chinese tourists have started returning to South Korea since March and we expect to see a strong rebound across all hotel segments this year,” said Ercan.