Hotel investment in Asia Pacific for the first half of 2017 hit US$2.9 billion, with investors zooming in on key gateway cities like Hong Kong and Sydney.
That’s according to the latest H1 Hotel Investment Highlights Asia Pacific report from JLL, which shows that among the top 10 biggest single asset transactions from January to June this year, six were done in Hong Kong and Australia, with Bangkok Shanghai and Seoul rounding off the list.
“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 for JLL’s Asia Pacific Hotels & Hospitality Group.
The Down Under dollar
On the back of tourism growth and strong fundamentals, Australia is likely to draw more investment, particularly after a recent flurry of significant transactions including the purchase of the InterContinental Sydney Double Bay for US$104 million – the highest value recorded for a suburban hotel in Sydney.
“Hotel transaction activity is expected to continue in Australia throughout the year given the low interest rate environment, sound economic growth outlook and weaker Australian dollar,” explains Sorgiovanni.
New projects in Australian cities will give a further boost to the country’s hospitality industry including; the International Convention Centre Sydney; the US$244 million expansion of the Art Gallery of New South Wales; and an AU$50 million redevelopment of the Gumbuya Park outside Melbourne.
Lure of Indochina
As supply in gateway cities around the world may be limited, emerging markets Cambodia and Vietnam hold steady in terms of attracting hotel investors.
“Investors continue to seek alternative investment in Vietnam or Cambodia, where arrivals’ growth is strongly supported by Chinese tourism,” says Sorgiovanni. “We’re particularly bullish about Vietnam’s growing tourism and thriving economy, which has seen foreign investors from across the region attracted to its hotel and resort market over the past 18 months. The country has become one of the most talked-about markets in Asia Pacific.”
Head of Research, JLL Hotels & Hospitality Asia Pacific