Asia Pacific hotel investment's transaction volume climbs to $3.9 billion

It's a 6.5% increase from 2013.

It has been noted that Asia Pacific’s hotel investment market has continued on the upward trend, which became evident during the second half of 2013, amidst a wave of investment capital.

According to a research report from JLL, transaction volumes totalled $3.9 billion during the fi rst six months of 2014 which represents a 6.5% increase on the same period in 2013.

Further, Asian hotel markets recorded the lion’s share of activity with sales totalling $3.5 billion, compared to Australasia’s $0.6 billion.

Japan ($1.0 billion) and China ($1.0 billion) dominated, accounting for 60% of Asian deal flow.

Activity is also becoming more widespread with 63 deals recorded in 15 countries. This compares to 70 deals in 11 countries during H1 2007 and highlights the current depth of Asia Pacific’s hotel investment market.

With limited opportunities available in the key gateways and pricing reaching new highs in many markets, investors are looking further afield, particularly for higher yielding investments.

Here's more from JLL:

Hotels in the major Asian gateways are trading at yields of 4 - 5% but with higher yields available in Australia, Maldives, Korea and Thailand for example.

At the start of the year we anticipated a shortage of investment opportunities to result in more capital being directed towards new development, however this has not eventuated with investors targeting shorter turnaround opportunities. Development land sales, where they have occurred, have either been strategic or opportunistic.

While investment is becoming more widespread, the major gateways still topped the most active hotel transaction markets in H1 2014, being in part a function of asset pricing. Volumes were highest in Shanghai, Sydney, Tokyo, Thailand’s resort markets, Melbourne,

Osaka and Hong Kong, whereas individual high value assets also traded in Kota Kinabalu and Manila.

Together the top ten markets accounted for more than 70% of deal flow. Sydney and Osaka were the most active transaction markets in H1 2014 with eight and six hotel assets transacting in each respectively.

In Osaka volumes were boosted by the sale of Osaka Namba Washington Hotel Plaza in a deal brokered by JLL. Situated in the heart of Osaka’s popular shopping and entertainment district of Osaka Minami, the 698-room hotel was sold to Singapore’s Ascendas Hospitality Trust for $87 million.

This represented the largest acquisition by an offshore investor in H1 2014.