Hong Kong hosted three hotel purchases of over US$100 million in the first three months of 2017, and, as if not to be outdone, Australia followed up in the second quarter with three hospitality deals of its own which broke the US$100 million threshold.
The focus on key gateway cities was representative of hotel investment in Asia Pacific during the first half of 2017, with Hong Kong, Sydney and other key gateway cities accounting for the largest portion of the US$2.9 billion in investment volume during the period.
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 biggest Hong Kong transaction of the year so far was Henderson Land’s US$299 million sale of the Newton Place Hotel Kwun Tong in early February. The listed giant followed up later that same month with the US$143 million sale of the Newton Inn North Point.
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
While gateway markets attracted the most capital so far this year, with limited in these established center, emerging markets Cambodia and Vietnam have also been 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.”
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