Hotel investment sales in Asia plummet 71.7% to US$1b in Q2

The most liquid markets were Japan and South Korea.

Following the significant retreat in investment sales in Q1 2020, Colliers notes the hospitality industry continues to witness a further drop in transactions in Q2 2020 to approximately US$1.0 billion, a decline of circa 56.8% and 71.7% quarterly and annually, respectively. This is unsurprising given the COVID-19 situation with investors waiting for improved economic activity or significant pricing adjustments before committing to transactions.

According to Colliers, the most liquid markets were Japan and South Korea while markets such as Hong Kong SAR, China and Taiwan saw little investment sales during the quarter. With international travel restrictions in place, domestic investors remain the dominant group in investment transactions.

While noting the comparatively lower investment sales during Q2 2020, investor interest has remained fairly firm against the backdrop of economic volatility and uncertainty. 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 situation.

For value-add investors and those looking to create a presence in the region’s key city and resort markets, this may be the right time to explore. With access to mainstream financing likely to be limited in the near term, cashed-up investors who can transact quickly will be in prime position.

Click here to download the Colliers Hotel Insights Q3 2020 report.