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Bulls in the hotel market

BUSINESS: While hotel investment in the Asia Pacific region remains strong, the real surprise from second quarter analysis by Jones Lang LaSalle Hotels (JLL) is the upsurge of investment in the global market, with US$14.8 billion (B444 billion) in hotel assets changing hands in the first six months of 2011.

Saturday 30 July 2011, 02:19AM

That figure represents a 117 per cent increase on the same time last year, which according to JLL, is driven by the easing levels of liquidity, improved hotel trading performance and banks’ actions to speed up workout programmes.

Activity in Asia Pacific totalled US$2.6 billion (B78 billion), a 59 per cent increase on the prior-year period, with the main action in Singapore, Australia, China, Japan and Hong Kong.

“Singapore dominated transaction activity in the first half of 2011 with volumes surpassing US$1 billion (B30 billion), reflecting pent up investor demand for the market,” Scott Hetherington, CEO-Asia for JLL, said.

“We forecasted volumes to total US$2.75 billion in Asia earlier this year, and we expect this figure to remain unchanged as growth in countries like Singapore and Thailand is expected to offset decelerated activity in Japan.”

In Australasia, deal volume totalled US$478 million (B14 billion) with offshore capital sources featuring strongly, accounting for 76 per cent of transaction volumes. That figure is expected to reach $1 billion by the end of this year.

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The Americas registered a compelling 187 per cent year-on-year upsurge with transaction volumes totalling US$7.4 billion, driven by large single-asset deals in gateway cities like New York.

A total of US$4.7 billion in hotel transactions took place in Europe, Middle East and Africa (EMEA) in the first half of 2011, marking an 84 per cent increase on the same period last year.

Activity accelerated as a result of a marked increase in the number of assets going into administration.

“Despite various natural, economic and political crises witnessed globally in the first few months of 2011, hotel transactions continued gaining momentum and volumes for the full year are expected to exceed our previous forecast,” Global CEO for JLL, Arthur de Haast, said.

“We now anticipate full-year numbers to reach US$34.8 billion globally, marking a 28 per cent year-on-year increase.”

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