APAC hotel investments 'roaring back in style': JLL

Transaction volumes grew 16% to USD8.4b in the first nine months of 2022.

A recent JLL report said investments in Asia Pacific’s hotel sector ‘roared back in style’ as inbound tourism surged and corporate business demand recovered.

According to the report, total transaction volumes in Asia Pacific in the first nine months of 2022 hit US$8.4 billion, a 16 per cent year-on-year growth. Portfolio sales of US$2.6 billion mainly in Japan and Australia were recorded for the first time since COVID-19 as institutional investors sitting on dry powder looked to deploy capital more efficiently in core markets.

Here’s more from JLL:

In line with JLL’s projection, sales are expected to exceed US$10.7 billion for the whole of 2022, with several powerhouses already spending big.

Fresh from the highs of the Tokyo Olympic Games, Japan reclaimed its crown as the most active investment market in the region as transaction volumes reached about US$2.3 billion, a 23 per cent rise in the year to date.

Meanwhile, South Korea achieved a new historic peak of US$1.8 billion in sales in the first three quarters of 2022. It generated the second most sales in the Asia Pacific behind only Japan in that period, led by several owners selling their hotels for conversion to alternative uses.

China is not far behind, recording US$1.2 billion by September, while Australia rounds off the Big Four with US$696 million. With domestic and offshore investment flowing in, the quartet accounted for 72 per cent of the year’s total investment activity.

Transactions in urban locations represented US$5.7 billion in the year-to-date September 2022, representing 81 per cent of 2019 levels. However, sales of resort assets grew at a stronger pace to reach US$911 million, exceeding pre-COVID levels by 34 per cent, underpinning investors’ confidence in the recovery that was driven in the first instance by pent-up leisure demand.

But the Great Return has also brought the return of inflation and higher interest rates, which will influence sales and investors’ underwriting in the near term. Despite the headwinds, there is cause for optimism. As more tourists jet off to their favourite destinations like the old times, the hotel investment market is nevertheless poised to embark on a journey back to normalcy.