APAC hotel investment to reach $10.7b by year-end

Investment volumes increased 33% to $6.8b in H1 alone.

Asia Pacific’s hotel property investment market is on a full-on recovery streak. In the first half of the year, investments surged 33% year-on-year to reach $6.8 billion. According to JLL, this is an 11.9% increase from 2019, demonstrating a return to pre-pandemic levels of capital deployment into the Asia Pacific hotels sector.

In total, there were 75 transactions in the first half of 2022, down 20.2% year-on-year and 33.0% on the first half of 2019 numbers. However, the total number of rooms transacted during the first six months of 2022 was 19,822, representing an increase of 29.9% versus the first half of 2021 and 9.4% during the pre-pandemic period in 2019. The increase in deal activity was influenced by a spike in portfolio transactions as institutional investors sitting on dry powder seek to deploy their capital more efficiently. However, according to JLL, ongoing momentum will likely be challenged by growing macroeconomic and geopolitical headwinds in the second half of 2022.

“The resilience of Asia Pacific’s hospitality sector and reopening of borders have accelerated further in 2022, with pandemic-induced pent-up corporate and leisure demand ensuring that travel demand will soon be on par with pre-Covid levels. As a result, the two-year lull in investment activity has largely subsided, demonstrated by record levels of capital raised for deals across Asia Pacific gateway markets and resort destinations,” says Nihat Ercan, Senior Managing Director, Head of Investment Sales, Asia Pacific, JLL Hotels & Hospitality Group.

Investment activity was spread across various Asia Pacific markets as the opening of borders ensured that many markets transition from reliance on domestic demand towards inbound leisure and corporate business. However, the conflux of current favourable travel market conditions and the longer-term economic outlook is creating a disconnect between buyers’ and sellers’ expectations around pricing.  

From an investment volume standpoint, Japan ($1.8 billion), Korea ($1.7 billion), and Greater China including Hong Kong ($1.6 billion), received the most capital in the first half of 2022. Singapore ($899.7 million), Maldives ($205.5 million), and Indonesia ($159.6 million) continued to recover strongly. Activity in Australia ($145.5 million) and Thailand ($37.7 million) was more subdued but will likely be bolstered in the second half due to numerous marque deals closing.

“A more sustainable recovery in travel will intensify the largest challenge faced by many investors of successfully deploying capital into investment grade product across the region. We remain steadfast in our conviction that total Asia Pacific hotel investment volume will cross the $10 billion mark despite the scarcity of assets coupled with macro and geopolitical headwinds that will continue to influence capital activity,” says Mike Batchelor, CEO, Asia Pacific, JLL Hotels & Hospitality Group.