Asia Pacific hotel investments cool in 1H2023: JLL
to 3Q2023: Knight Frank
Asia Pacific hotel investments saw a steep year-on-year decline of 51% in the first half of 2023, according to JLL’s research report. This was due to the macroeconomic challenges and the increasing cost of debt. Invested volumes for the period slided from US$6.41 billion to US$3.13 billion.
In Singapore, the hotel transaction volumes for the same period fell by a concerning 95%, down to US$30 million. In an attempt to somewhat counterbalance the drop, UOL announced the sale of Parkroyal on Kitchener Road worth US$388 million earlier this month. The hotel, located in Little India, was sold to Midtown Properties, a unit of the Worldwide Hotels Group.
China also witnessed a decline in hotel investments, decreasing by 76% y-o-y to US$300 million. Contrastingly, Japan sustained strong hotel investments, growing 56% y-o-y to US$1.54 billion. Similar trends were seen in Australia and New Zealand transactions, with volumes soaring 189% y-o-y to US$820 million.
Nihat Ercan, CEO, Asia Pacific, JLL Hotels & Hospitality Group, commented on the current situation: “We have observed the impact of a continued disconnect between the robust tourism demand and macroeconomic and geopolitical challenges in the first half of 2023, resulting in a gap between sellers’ pricing expectations and buyers’ access to capital.”
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JLL had to downwardly revise their full-year 2023 forecast for Apac hotel investments to US$8.7 billion, a 24% decrease from their initial forecast. Despite the subdued investment volumes in 1H2023, the firm noticed an improvement in the hotel industry’s performance as average daily rates across the region’s hotels increased, especially following China’s reopening in January.
JLL has been part of three major hotel transactions this year, advising clients on their sale. In July, LLL advised Crystal Plaza Resorts on the sale of Amari Havodda Maldives resort to Thai hospitality conglomerate Minor International Public and its financial partner, Abu Dhabi Fund Development. June also saw the firm announce the completion of Southeast Asia’s first hotel portfolio sale in 2023, a US$106.1 million deal.