Australia, Vietnam leading investment destinations

Solid business fundamentals and a weak currency have made Australia the top destination for hotel investment in Asia Pacific so far this year, with Japan and Vietnam the bright spots among East and Southeast Asian markets.

Australia was home to 60 percent of all Asia Pacific hotel transactions in the second quarter of this year, according to Savills’ Asia Pacific Hotel Sales & Investment Report. Much of this volume came from the sales of just two hotels: the Westin Sydney and the Hilton Sydney.

The Westin is currently being acquired by China-based Far East Land and Singapore-based Sino Land Company from the Government of Singapore Investment Corporation for A$445 million. Singapore-based Bright Ruby Resources acquired the Hilton Sydney from Hilton Worldwide for A$442 million.

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Australia’s appeal has been boosted by strong and steady growth in Asian business and leisure tourist arrivals, in addition to a weak Australian dollar. All told, the consultancy reported that in Q2, 41 deals in 11 countries accounted for a total of $1.95 billion in transactions.

Overall Asia Pacific transaction value for the first half of 2015 was estimated at $3.02 billion, a decrease of 32 percent year-on-year.

Not surprisingly, Savills found Singaporean and Chinese investors to be the most active in the Asia Pacific market this year. Singaporean companies invested $587 million, accounting for 30 percent of all Q2 sales. Mainland Chinese investment made up 23 percent of investment during the same period, with Hong Kong and Japan in third with 14 percent each.

Australia has been on a strong run of hotel transactions for the past 12 months, with other sales including the Four Points by Sheraton in Perth for A$91.5 million, Rydges Darwin Airport Hotel and Resort (A$84 million), Diamant Hotel in Sydney (A$23.3 million) and the Rendezvous Sydney Central. Pontiac Land Group is the latest to enter the Australian market, with its September acquisition of two historic buildings in Sydney that it will convert into a A$300 million 240-room luxury hotel.

Japan was the star of East Asia in Q2, with 11 hotels sold for $268 million, compared with only one transaction during the same period on the Chinese mainland.

The Savills report painted a picture of contracting investment in Southeast Asian hotels, which accounted for $446 in transactions in the first half, a year-on-year decrease of 52 percent. Of the 10 member states of the Association of Southeast Asian Nations, only Vietnam reported deal growth, and only 2 percent at that.