JLL's Hotels & Hospitality Group reported that 2013 was the strongest year for the hotel industry since the global financial crisis in 2007 in terms of hotel investment growth in Asia. Investment volumes reached as high as $7.5 billion by the end of 2013, according to TTG Asia, up 218 percent over 2012. JLL forecasts 2014 to be another high-scoring year for Asia hotel investment, but predicts falling transaction volumes in the face of limited supply, despite strong demand.
Singapore, Japan and China specifically posted high transaction volumes, with Japan reporting $2.7 billion, up 480 percent over 2012 as hotel trading performance improved alongside the expansion of the country's domestic economy, and growth in both corporate and leisure travel. New records were also reached in the Singapore hotel market, showing transaction volumes of as much as $2.0 billion, over 10 times what was recorded in 2012, supported by the sale of the Grand Park Orchard hotel and Knightsbridge retail, the City’s largest single asset transaction to date.
Singapore Business reported that China accounted for approximately 13 percent of Asia's total investment activity, recording $1.1 billion in transactions as recent government announcements to improve access to financing drove investor sentiment over the second half of 2013.
“Strong investor sentiment and, importantly, the availability of quality hotel assets were key reasons behind Asia’s impressive sales volume in 2013 which was hindered only by the availability of additional stock as many owners increasingly hold off selling assets in anticipation of further market growth,” Mike Batchelor, JLL’s managing director of investment sales – hotels & hospitality, told Travel Daily Media. “Mature hotel markets such as Singapore continue to be governed by well capitalized, inter-generational investors and as stock becomes increasingly limited, investors are now starting to look further afield once again at new and emerging markets in the region in the search for greater yield and capital growth opportunities.”
“There remains no shortage of capital to be invested into the sector in 2014 (mostly from inter-regional Asian investors), however improved trading performance and the tightening of cap rates have elevated the expectations of the region’s sellers," Batchelor said.