Overseas buyers could be making big investments in New York City's hotel market this year, with mounting interest coming from Qatar Kuwait, Malaysia and Singapore, let alone China.
According to The Real Deal, investors spent 1.9 billion on the city's hotel market in 2014, 12 percent more than in 2013. This data come from a new report by JLL, which also found that foreign money was involved in 50 percent of New York City hotel investment sales last year.
The real news is that these numbers are about to see a bump. JLL expects overseas investors to spend close to $3 billion in New York this year, with their eyes on the largest and priciest hotels in the market.
“Investors across the globe are ready to compete for New York hotels of all types,” JLL’s Gilda Perez-Alvarado said in a statement. “They’re targeting large conversion and repositioning opportunities, relatively new mid-market assets and well-established large hotels.”
Aside from Beijing-based Anbang Insurance Group's $1.95 billion purchase of the Waldorf Astoria, investors from Qatar, Bahrain, Malaysia, Singapore and Kuwait purchased seven hotels in 2014 with a total value of $1.5 billion. The market prices for hotels are only going up in New York, and capitalization rates are falling (the average cap rate in 2014 for New York City hotels was 5.5 percent, versus 6 percent in 2013).
Large transactions have recently been the name of the game in New York City. In August, Hyatt Hotels Corp. acquired the Park Hyatt New York for $390 million, and one major property that is currently under scrutiny is the Mondrian Soho. The Sapir Organization took out a $180 million CMBS loan from Column Financial to buy the hotel, and according to the Commercial Observer, the recorded purchase price for the hotel was $200 million.