APAC hospitality investments down 54% to US$1.4b in Q4 2020

Around 6% of deals were put off in 2020.

Although gradual resumption of domestic activity and business travel were seen in Q3 2020, Colliers notes that the hospitality industry saw a decline in transactions in Q4 2020 to approximately US$1.4 billion, registering a fall in investments by circa 18% and 54% quarterly and annually, respectively.

With the absence of overseas tourist arrivals, and as the bid ask spread between buyers and sellers has widened, Colliers notes that circa 6% of deals were put off in 2020. Nevertheless, smaller, less capital-intensive hotel properties were still traded, in contrast with larger hotel deals that were sidelined.

Here's more from Colliers: 

Whilst green lanes for business travel are slowly emerging, investors are still on the lookout for high- value quality assets, with significant pricing adjustments making listed entities prime targets for M&A opportunities. The most liquid markets were South Korea, China, and Japan, while markets such as Singapore and Malaysia saw little investment sales during the quarter.

With international travel restrictions in place, markets with large domestic investment bases continue to have an advantage during times of challenged cross-border investment, as Tokyo and Seoul maintain their top positions.

In the coming months, we expect investment activity to gain pace as investors move to take advantage of any opportunities that will emerge, although cautious sentiment and stricter underwriting remain key given the evolving COVID-19 situation, coupled with economic volatility and uncertainty.