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Hotel acquisitions in Europe by Asian investors soared by 90 percent year-on-year and by 20 percent globally, according to the latest report from CBRE.
In particular, Singapore companies purchased US$331 million (S$447.84 million) worth of hotel properties in the continent, accounting for 20 percent of the overall cross-border hotel acquisitions in Europe, Middle East and Africa (EMEA) by Asian investors.
Looking ahead, Asian investment in European hotels is expected to rise by up to 58 percent to US$22.7 billion (S$30.71 billion) this year mainly due to less stringent rules on outbound investments and the limited supply of investable hotel properties in domestic markets.
“Asian institutional funds are generally under-allocated to real estate because of stringent regulations, especially around overseas assets. Most of their overseas allocations are in liquid assets such as equities, cash, fixed income and government bonds,” said Arthur Buser, Executive Managing Director of CBRE Hotels for Asia Pacific.
“[But] this situation is changing as China, South Korea, Taiwan and other countries have started to allow overseas direct investments, higher allocations to real estate, and a simplified approval process.”
He explained that Asian investors are drawn to hotels properties in large European cities like London, Paris and Frankfurt, given that hotel real estate is an ideal asset class due to its longer fixed-income lease terms and higher yields as compared to other traditional property segments even those in prime locations.
Jileen Loo, CBRE Hotels Director for EMEA, revealed that the first wave of Asian hotel buyers largely consisted of high-net-worth individuals, real estate investment trusts (REITs) and purchasers seeking trophy assets for prestige and wealth preservation.
“Due to a series of relaxations in domestic government policies, Asian insurance funds, particularly from China, are now entering the global hotel market in a big way. These buyers are finding limited investable stock available for consideration in domestic markets and when quality assets become available, the competition is fierce,” he added.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
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