Hotel investment in Asia Pacific slows in the first half of 2023

Based on a study published by JLL, Asia Pacific (Apac) hotel investment numbers decreased by 51% year-over-year in 1H2023, which was influenced by macroeconomic issues and the increasing price of credit. “Coming off a strong base in 2022 and despite a positive market conditions, hotel investment decreased by US$3.13 billion ($4.14 billion) in the 1H2023 period, compared to US$6.41 billion in the same period in 2017,” the report indicates.

Watten House an affluent condominium estate located within the picturesque and serene area of Bukit Timah.

In Singapore the hotel transactions were US$30 million in the first half of 2023 which is which is a 95% year-on-year drop. The deal to sell Parkroyal located on Kitchener Road for US$388 million which was made public by UOL earlier in the month is expected to boost the sector in the second quarter. The hotel, which is situated at Little India, was purchased by Midtown Properties, a unit of the Worldwide Hotels Group. JLL was the advisor on the sale.

In the remainder part of Apac, China also saw an increase in investment in hotels by an average of 76% year-on-year to 300 million dollars. Contrastingly, Japan sustained robust hotel investment, increasing 56% over the same period up to US$1.54 billion. In the same way, hotel investment within Australia as well as New Zealand rose, with numbers rising at 189% year-on-year to reach US$820 million.

“We have seen the effects of a constant gap between the booming demand for tourism as well as geopolitical and macroeconomic issues in the first quarter of 2023. This creates an in-between of the expectations of sellers regarding pricing and buyers access to capital” claims Nihat Ercan, CEO, Asia Pacific, JLL Hotels & Hospitality Group.

With these factors, JLL has revised its 2023 full-year forecast for Apac hotel investment by US$8.7 billion, which is down 24% from the initial 2023 projection.

Despite the tepid investment volume in 1H2023, the company states that the industry of hotels has seen “considerable improvements” in terms of trading performance, aided by the rising average daily rates in the hotels of the region and China’s opening in January of this year. “Approaching the year 2024 we are expecting to see opportunities emerging in certain locations across Apac and the Pacific region, where the prices have been reduced which allows those interested to rethink their options,” Ercan adds.

JLL has provided advice on two other significant hotel transactions in recent times. In July, JLL was advising Crystal Plaza Resorts on the sale of its Amari Havodda Maldives Resort in the Maldives to Thai tourism group Minor International Public and its financial partner, Abu Dhabi Fund Development. It was in June that JLL confirmed the conclusion of the first hotel portfolio in Southeast Asia to be sold for to be sold in 2023 – Pullman Jakarta Central Park and the Ibis Saigon South and Capri by Fraser both within Ho Chi Minh City – to a total value of US$106.1 million.