Australia and Hong Kong Dominate Hotel Investment for First Half of 2017
Hotel investments made in the Asia Pacific region so far in 2017 have largely focused on gateway cities, such as Honk Kong, Singapore, Sydney and Melbourne
As the first half of 2017 comes to a close, hotel investments made in the Asia Pacific region this year have largely focused on gateway cities, the likes of which include Honk Kong, Singapore, Sydney and Melbourne.
Let's take a closer look at the relevant numbers: Asia Pacific hotel investment volumes in 2017's first half were a shade more than $2.9 billion, and there has so far been a shortage of investment grade hotels on the market compared to this time in recent years. Experts have reported just 28 hotel deals being made throughout six countries that total more than 5,000 rooms for guests, with the average price per key of all these transactions recorded at $486,600.
It is, of course, relevant to note that Airbnb and other alternative accommodation operators have disrupted hotel performance as of late in the region's larger cities, although a legislative bill passed by the National Diet of Japan in June has changed this for that county, outlawing any illegal operators starting in 2018 for Japan.
This move comes amid what could be a significant downturn for the island nation, with no Japanese transactions qualifying for the Top 10 single-asset transactions list with limited big ticket deals recently on the market. However, it may not be time to panic just yet, as portfolio transactions in the country have remained eagerly contested, meaning that Japan's long-term hospitality outlook is positive, especially with the Summer Olympics set to take place there in the year 2020.
"Hong Kong and Australia have been the standout markets in the region in terms of inbound investment, amounting to just under US$1.5 billion altogether, driven by robust tourism growth and solid trading performance driving investment activity in Australia," says Frank Sorgiovanni, Head of Research, Asia Pacific at JLL Hotels & Hospitality Group.
Australia has become a firm favorite among Asian-based hotel investors with several buying chances arriving in the market as of late, especially in the Sydney and Melbourne markets. In fact, the majority of Australian deals actually took place in Melbourne, with the exception of InterContinental Sydney Double Bay, which sold for $104 million, making it the highest recorded value for a hotel in Sydney's suburban areas. This property was acquired by a consortium of investors based out of China. The outlook for Sydney in the months to come is also a positive one, with the recent addition of the International Convention Center providing a great boost to the city's hotel trading performance and MICE industry, along with new supply in the pipeline that will likely blossom as the city's occupancy limits are tested, approaching a marketwide cap.
Let´s take a look at some projects currently underway in Australia and Hong Kong
5 additional levels of office and 10 additional levels of hotel accommodations on top of the two existing office and hotel towers which are still in operation during construction.
Plans call for two new hotels on the site of the demolished New World Centre on the harbourside at Salisbury Road in Tsim Sha Tsui. The 63-storey Rosewood Hong Kong and a neighbouring 334-room hotel.
Lend Lease is funding, developing and building the new Sofitel Sydney Darling Harbour and on completion it will be sold to Dr Schwartz.
Ideally situated for business and leisure travellers, The Westin Brisbane will feature guest rooms with sweeping views of the river and city skyline.
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