Thanks to owners implementing "increasingly dynamic investment strategies," investment-grade hotels in Sub-Saharan Africa are increasingly within reach for developers.
Hotel real estate investment in Africa is dominated by development, but the recent spike in transactional activity and increasing open market transactions is providing much needed liquidity, Xander Nijnens, SVP of JLL's Hotels & Hospitality Group Sub-Saharan Africa, said.
Even more importantly, the current increase in hotel transactions in Sub-Saharan Africa is creating improved exit opportunities, which is critical to attracting new development capital to the region. ”We expect to see a continued increase in liquidity in 2017,” Nijnens said in a statement.
As we noted last month, the December 2016 sale of the Movenpick Ambassador Accra by Kingdom Hotel Investments at $100 million was the largest single asset hotel transaction to date in Sub-Saharan Africa.
“The sale of the Movenpick Ambassador in Accra is a landmark transaction in terms of the quality of the asset and the selling price achieved,“ Xander Nijnens, SVP of JLL's Hotels & Hospitality Group Sub-Saharan Africa. “Interest in the asset came from a wide range of global players, yet ultimately the successful buyer was a regionally focused fund with the best ability to understand the risks and rewards in the transaction.”
The February 2017 sale of the Hyatt Regency Johannesburg by a local property fund to a Middle Eastern investment group for a reported $36 million highlights the continued trend for foreign interest in hotel investment opportunities in South Africa, attracted by the devaluation of the Rand and the high growth in tourism. JLL facilitated the sale.
However, the low level of stock and the predominance of off-market transactions remains a key challenge to hotel investment in the country's market.
The Indian Ocean region, meanwhile, is also seeing increased liquidity with the pending acquisitions of Tamassa Resort by Mara Delta for $40 million and its 44-percent stake in three Beachcomber-branded hotels owned by New Mauritius Hotel Group for $55 million. Aside from the more mature markets of the Maldives and Mauritius, JLL is also seeing activity in the Seychelles, Zanzibar and Madagascar.
“There is an increasing interest in the Indian Ocean region by Asian and Middle East capital, as well as some of the prominent regional players,” Nihat Ercan from the Asia Pacific team said, noting that the improved air access to the area (and its reputation for safety) has helped boost tourism—and its appeal for hotel investors.