Value of China's hotel investments and transactions surge 16.3% QoQ

For a total value of US$121.9 million.

In the field of hotel sales and investment, it has been reported that China has completed five major transactions and two off-plan projects in Q3 for a total transaction value of US$121.9 million, up 16.3% from Q2/2014.

According to a report from Savills, with the economic slowdown and the increased supply of 5-star hotels highlighting the fragility of the high end hotel market, investors are seeing more opportunities for mid-scale hotels where there is a growing base of demand and operating profi t margins are higher.

This included the acquisition of the Holiday Inn Downtown Beijing by Beijing Properties for a total of RMB554.2 million (US$90.2 million), equating to RMB1.6 million (US$263,188) per room.

Here’s more from Savills:

International hotel investors continue to show a preference for core assets in 1st tier cities such as Shanghai and Beijing, and provincial capitals such as Wuhan and Xian.

Chongqing become the new destination for opportunistic investors recently as CapitaMalls Asia invested in a super-scale mixed-use development comprising a shopping mall and eight towers for residential, office, serviced residence and hotel use in Chaotianmen Chongqing.

The project is expected to be completed in 2017 for a total of more than RMB21.0 billion (US$3.4 billion).

The investment values of the serviced residence and hotel are estimated to

stand at RMB66.5 million (US$10.7 million) and RMB133.0 million (US$21.4 million) respectively.

It is noticeable that a few transactions completed in China are changing hands via related parties for example Ascott Residence Trust acquired a portfolio for Citadines serviced apartments from CapitaLand in various cities, and Great Eagle Holdings Limited and Shui On Land are currently proceeding with the transaction of Langham Xintiandi Hotel in Shanghai,

which expect to close by the fourth quarter.

In Hong Kong, the 50-room Mira Cube hotel located in Knutsford Terrace in Tsimshatsui was sold by Miramar Group to Hong Kong based Real Honest Ltd for HK$480.0million (US$61.0million), approximately HK$9.6 million (US$1.2 million) per room.

This hotel is expected to open in January 2015 and will continue to be managed by Miramar Hotel Group.

The total volume of transactions including hotel and serviced apartments for the fi rst three quarter was recorded at HK$2.2 billion in Hong Kong, a drop of 72.1% from the same period last year.

It should be noted that transactions of serviced apartments represented 42% of total transactions. With long run high occupancy rates and high operating profi t margins, serviced apartments clearly offer an attractive alternative to hotels.