SINGAPORE, 18 October 2024: Asia Pacific hotel investments will total USD12.2 billion for 2024 as an influx of investment activity, a more favourable interest rate environment and generally supportive macro and microeconomic developments will positively impact sentiment in the sector regionally.
According to analysis by JLL, full-year Asia Pacific hotel investment volumes in 2024 are anticipated to grow by 4.3% on 2023, which totalled USD11.7 billion.
In the first nine months of 2024, cumulative transaction volumes totalled USD9.05 billion, tracking up 15% year-on-year ($7.87 billion in 2023) and representing 90% of the volume of 2019. Led by Japan, cross-border investment surged in YTD Sep 2024 driven by large transactions in Asia, while Australia experienced a rare lull in annual activity.
“A combination of broader economic factors, including a positive macroeconomic outlook regionally, supportive interest rate policies and solid consumption factors give us confidence that full-year hotel investment will comfortably eclipse last year. Investors have consistently shown an appetite to play larger in the hotel sector in Asia Pacific, and we see no signs that activity will wane in the last quarter of 2024, making us increase our investment volume forecast to $12.2 billion,” says JLL Hotels & Hospitality Group, Asia Pacific CEO Nihat Ercan.
JLL analysis confirms that average daily rates (ADRs) in Asia Pacific are up 19% in local currencies versus the last cyclical peak in 2018-2019. Furthermore, most markets still have room to increase occupancy back to the same pre-pandemic highs, given strong business travel offsetting some pullback in leisure travel. Concurrently, JLL believes that the last leg of occupancy may take longer to come back, with MICE still slower to return and Mainland China still facing lingering economic issues in the short term, influencing overall industry performance.
On a country basis, investment volumes were generally positive in the first nine months of 2024, with a few exceptions across the Asia Pacific region.
Japan: In the first nine months of 2024, Japan further established itself as the most attractive hotel market regionally. Activity through the end of September resulted in sales volumes at USD3.8 billion. Given that investor interest is unlikely to wane, JLL forecasts total sales of USD4.7 billion for 2024, followed by an increase of 4% in 2025 at USD4.9 billion. Despite the recent interest rate hike and slight appreciation of the yen, JLL anticipates Japan’s hospitality investment to remain active given the strong underlying supply and demand fundamentals.
China: Investment in Mainland China’s hotel space totalled $1.8 billion as of end Sep 2024, reflecting a 6.4% growth from the previous year. Shanghai and Beijing remained the most actively traded hotel investment markets, accounting for over 50% of total transaction volumes. Regarding buyer profiles, high net-worth investors are still among the more active buyers of hotel assets. The market momentum will likely continue into the last quarter of 2024, with total hotel transaction volumes to reach USD2.1 billion for the full year.
Australia: Australian sales volumes will remain relatively subdued over 2024, JLL analysis suggests. Year-to-date volumes have totalled USD629 million (settled), down 38% from the same period last year. JLL estimates that total transaction volumes should reach approximately USD1.1 billion for the full year, which is below the long-term average, but it is likely influenced by the fact that many 2024 transactions could also be classified as ‘last year’ deals.
Korea: Hotel transaction volumes reached approximately USD1.1 billion in 2024 year-to-date with the Conrad Seoul comprising the largest transaction. JLL expects several additional hotels to transact before the end of the year, resulting in an estimated transaction volume of nearly USD1.3 billion for the full year 2024.
Singapore: With a tourism industry firing an all cylinders, supported by mega events and high occupancy rates, Singapore’s attractiveness to investors has remained justifiably high. Deals recorded in 2024 have eclipsed the previous years totals leading JLL to project cumulative hotel investment volume for the full year to be approximately to USD1 billion.
Hong Kong: Hong Kong remains an active market, but buyers have become more selective, opting for city centre hotels in prime locations. JLL forecasts volumes of approximately USD500 million in 2024, roughly 35% below 2023 levels. Given that this year’s prevalence of wide bid-ask spreads is expected to moderate and tourism in Hong Kong is poised to pick up further, 2025 is projected to see more investment activity.
India: Transaction volumes have multiplied from USD76 million in 2022 to USD337 million in 2023 and are forecast by JLL to land at USD440 million this year. Capital has been supported by the sector’s robust performance in room rates, revenue, and occupancy levels. Outside of investment, development interest remains strong, with hotel brands having signed agreements for approximately 19,500 new hotel rooms in the first half of 2024, accounting for 77% of the total number signed in 2023 in emerging metros.
Thailand: Investment volume dropped in 2023 due to a wide bid-ask spread and rising interest rates, however in 2024, there has been a remarkable recovery in investment activity. Year-to-date transaction volumes stand at USD404 million, with a projected full-year volume of over USD450 million. JLL anticipates 2025 to be on par or better with the 15-year average of USD300 million in transactions, bolstered by expected lower interest rates and positive tourism sentiment from visitors around the region.
