Savills: 9 things to know about Asia-Pacific hotel investment

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Savills’ Asia Pacific Hotel Sales & Investment Overview paints an interesting picture of second quarter (and first half) of the year in the region.

Here are nine key takeaways:

  1. Most transactions were domestic, with only seven (or 25 percent) being cross-border acquisitions. 
  2. Investment sales in the first half of 2016 fell by 17.6 percent year-on-year to nearly $3.4 billion, from $4.2 billion in the first half of 2015.
  3. The second quarter of the year registered $1.66-billion worth of investment transactions, representing a 30.5-percent decrease over the second quarter of 2015 ($2.39 billion).  
  4. Chinese companies only invested $53.1 million in one existing overseas APAC hotel to date in 2016. Singaporean firms, meanwhile, invested $319.4 million in four different countries. The number of transactions was low, with 31 hotels compared to 42 in the same quarter last year. 
  5. Japan had the largest transaction volumes by far, with 59.5 percent of second-quarter sales worth $987.8 million.
  6. Taiwan had the second largest transaction volume with 11.5 percent or $190.6 million.
  7. Vietnam had the third largest volume of transactions with 9.4 percent worth $156 million.
  8. Prime yields in Tokyo, Hong Kong, Singapore and Sydney have reached a level of between 3 percent and 5 percent, which makes it difficult for investors to penetrate these markets.
  9. Average transaction price is higher this quarter at $53.5 million, compared to $47.8 million in Q2 2015. This is in line with Savills’ forecast that 2016 transaction volumes will be less than 2015’s, due to a lack of opportunities in core markets.

”With some uncertainties about the future of the EU, we expect investors to be more attracted by Asia Pacific properties, to take advantage of economic growth in key markets such as China, Japan and Australia, which will eventually put more pressure on yields."

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