2015 was the year of the ‘big’ hotel deal, punctuated by hotel brand mergers and high-value trophy-asset transactions. The InterContinental Hong Kong brokered by JLL was the largest single-asset hotel sold in Asia Pacific for USD 938 million.
Asia Pacific recorded hotel transaction volume of over USD 9.2 billion in 2015. Japan (USD 2.5 billion) was again a standout market, with deals undertaken by a suite of domestic investors in addition to increased interest from offshore buyers. Japan was closely followed by Hong Kong and Australia, both exceeding the two billion mark. Over 33,000 keys were traded across the region.
Substantial levels of Chinese capital continue to seek offshore opportunities with a majority being large private conglomerates with existing real estate and development exposure. These groups have been acquiring trophy assets in several key gateway global cities. Global outbound Chinese capital into hotels surpassed USD 5.3 billion in 2015.
Overall, cross border investors accounted for half of all capital flow regionally (deals above USD 5 million). With 156 deals (comprising single-asset and portfolio transactions) recorded across 11 countries in 2015, offshore investors have dominated larger deals (particularly into Australia) with a higher average deal size of almost USD 70 million.
Hotel transactions within Mainland China have started to near one billion annually; this level is expected to continue, if not increase, in 2016. Australia will remain active as well, though given the large number of prime single-assets having traded to long-term holders recently, the number of opportunities available to investors is expected to decline.
The lack of available assets in Hong Kong – which saw its highest transaction volume ever in 2015 – will make it competitive. Similarly, tightly-held hotel stock in Singapore will mean any opportunities are highly sought-after.
The key players in Japan will comprise a number of domestic REITs in addition to interest from US Private Equity funds and Southeast Asian families. There is likely to be increased demand from Chinese investors looking to purchase hotels in second tier Japanese markets through 2016.
For more on this, please read JLL’s latest Hotel Investment Highlights H2 2015 report outlining our regional overview along with key trends impacting the hotel investment sector. This can be found at our Global Hospitality Research Hub.
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