In terms of volume of hotel investment transactions in Asia Pacific, Hong Kong was in 1st place through the 3rd quarter of this year, but Thailand is catching up. The Kingdom recorded USD35 million in hotel transaction volume which was the 3rd highest total in the region, according to research from JLL.
This is the highest total volume recorded since 2014 with Bangkok being the location for most of the activity. Among the notable hotel deals this year were the selling of the Premier Inn portfolio and Sukhumvit S27. These 2 deals were worth a combined USD11.5 million. A stable political environment and relative affordability of hotels compared to other countries in Asia are the main reasons for the surge in hotel investment.
Hong Kong was tops in the Asia Pacific region with 11 deals valued at USD1.5 billion having occurred between the start of 2017 through September. Several transactions may see the hotel space acquired converted into residential or office space due to the strong demand for these in Hong Kong at the present time.
“For investors, Hong Kong hotels are appealing because of the discounted rate per square foot when compared to other asset classes, something that has been a factor in some recent transactions. Hotels such as J Plus Hotel has already been purchased for conversation, likely into an office,” says Mike Batchelor, Head of Investment Sales Asia, JLL Hotels & Hospitality Group, in a press release.
During the opening 9 months of this year, hotel investment volumes in Asia Pacific reached USD5.3 billion which was a decrease when compared to the same period last year. JLL is predicting that somewhere between USD1.5 to 2 billion in deals will close before the year ends.
“We expect total year-end hotel investment volumes to reach between USD7.5 and USD8 billion across Asia Pacific, slightly down from USD8.6 billion recorded last year. There is likely to be a decline of around 10 per cent in 2017 due to the lack of hotels for sale in the market and a pricing gap between buyer and seller expectations,” says Batchelor.
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