Japan hotel investments to reach US$2.5 for full year 2022

Thanks to large transactions such as the Hyatt Regency Shinjuku.

Japan’s hotel transaction market has made a notable recovery in 2022, according to a JLL report. This was largely driven by GIC’s US$1.1 billion acquisition of the Seibu Portfolio, a landmark transaction, signed in June 2022, with circa US$770 million of the portfolio transferred in September 2022. 

Here’s more from JLL:

Revenue per available room (RevPAR) for key markets in Japan was up 95 per cent for the year-to-date August 2022 compared to last year. Despite the encouraging growth, Japan’s trading is still far from its pre-COVID levels with some key Japan markets still 55 percentage points behind 2019 levels for the year-to-date August 2022 in terms of RevPAR. Spurred by the great reopening, demand will keep growing while supply continues to drop off. The pipeline supply of hotels has slowed for almost every market, with Kyoto experiencing the largest dip. 

Overall, this bodes well for a relatively swift recovery to the pre-COVID levels that we expect to see. Overall, transaction volumes are expected to be strong for the remainder of the year, fuelled by large sales such as the Hyatt Regency Shinjuku culminating in US$2.5 billion for the full year. 

Investors remain eager to acquire hotel assets in Japan and the market is arguably a top priority for institutional players as well as HNWIs as its yield spread remains the best in the region. That healthy appetite is also showing in the number of new investment platforms set up this year, such as SC Capital’s Japan Hospitality Fund and KFS Hotel Capital. Japan at the moment is unquestionably the top choice destination for hotel investors. 

As Japan moves towards full reopening, its strong domestic demand, rebounding international tourism demand, coupled with the recent weakening of the yen, could translate into further pickup in transaction volume to US$2.8 billion in 2023.