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Asia Pacific hotel investments cool in 1H2023: JLL

/ EdgeProp Singapore |

July 19, 2023 5:30 PM SGT

The sale of Parkroyal on Kitchener Road for US$388 million in July is expected to bolster Singapore hotel investment volumes in 2H2023 (Picture: Albert Chua/The Edge Singapore)

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SINGAPORE (EDGEPROP) - Based on a research report by JLL, Asia Pacific (Apac) hotel investment volumes fell by 51% y-o-y in 1H2023, weighed down by macroeconomic challenges and the rising cost of debt. “Coming off a high base in 2022 and despite supportive market fundamentals, hotel investments moderated to US$3.13 billion ($4.14 billion) in 1H2023 versus US$6.41 billion during the same period last year,” the report indicates.

In Singapore, hotel transaction volumes totalled US$30 million in 1H2023, a 95% y-o-y plunge. The sale of Parkroyal on Kitchener Road for US$388 million, announced by UOL earlier this month, is expected to bolster the segment in the year's second half. The hotel, located in Little India, was purchased by Midtown Properties, a unit of the Worldwide Hotels Group. JLL advised on the sale.

In the rest of Apac, China also saw a drop in hotel investment activity, by 76% y-o-y to US$300 million. In contrast, Japan sustained robust hotel investments, growing 56% y-o-y to US$1.54 billion. Similarly, hotel investments in Australia and New Zealand rose, with volumes surging 189% y-o-y to US$820 million.

“We have observed the impact of a continued disconnect between the robust tourism demand and macroeconomic and geopolitical challenges in the first half of 2023, resulting in a gap between sellers’ pricing expectations and buyers’ access to capital,” says Nihat Ercan, CEO, Asia Pacific, JLL Hotels & Hospitality Group.

Given these headwinds, JLL has revised its full-year 2023 forecast for Apac hotel investments to US$8.7 billion, down 24% from its initial 2023 estimate.

Notwithstanding the muted investment volumes in 1H2023, the firm notes that the hotel industry has shown ”considerable improvement” in trading performance, supported by rising average daily rates across the region’s hotels and China’s reopening in January this year. “Approaching 2024, we expect to see more specific opportunities emerge in some destinations across Apac, where prices have been adjusted downwards, enabling interested parties to reconsider,” Ercan adds.

JLL has advised on two other notable hotel transactions recently. In July, it advised Crystal Plaza Resorts on the sale of Amari Havodda Maldives resort to Thai hospitality conglomerate Minor International Public and its financial partner, Abu Dhabi Fund Development. In June, JLL announced the completion of Southeast Asia’s first hotel portfolio sale in 2023 – Pullman Jakarta Central Park; and the ibis Saigon South and Capri by Fraser, both in Ho Chi Minh City – for a combined US$106.1 million.

Check out the latest listings near Parkroyal on Kitchener Road

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