Bookmark & Share
Hotel investment turnover in the Asia Pacific fell 43.4 percent year-on-year to US$3.7 billion (S$4.96 billion) in the first half of 2016 as investors turned more risk-averse due to the weaker economic environment, a CBRE report revealed.
Japan and Australia continued to attract investors due to market transparency, strong tourism growth, liquidity as well as the high quality and availability of stock.
Specifically, domestic investors continue to dominate Japan while foreigners still find it challenging to enter the market without local connections.
Australia, on the other hand, saw local buyers accounting for most of the activity, although there is “still significant interest from Asian capital, especially those at the top end of the market.”
“Among other major markets, Hong Kong and Singapore remained subdued,” said the report.
This comes as many Singaporean investors prefer to seek opportunities abroad, particularly in the Maldives, the United States and Europe, which all offer better yields and more upside potential compared to Singapore.
According to the report, interest from foreign investors was also limited as the lack of stock for sale and price gap between vendors and buyers continue to discourage deal flow.
Moreover, REITs in Singapore have been quiet in recent quarters. In fact, Ascendas withdrew from sale its listed Ascendas Hospitality Trust – which comprised a portfolio of 11 hotels in Australia, Singapore, China and Japan – in April. The REIT has instead opted to grow the portfolio, the report said.
Funds have also remained inactive, with the last noteworthy deal being Gaw Capital Partners’ S$203 million purchase of Big Hotel Singapore in Q3 2015.
The city-state saw year-to-date occupancy for the overall market stand at 83 percent in June. Overall RevPAR dropped 0.6 percent even as the mid-tier and upscale segment registered growth. Overall ADR also contracted by 1.9 percent.
Looking ahead, CBRE expects investors to remain cautious for the rest of the year.
“However, once the present market uncertainty has cleared, activity will pick up, with core assets or assets in safe havens such as Australia, Japan, and Singapore set to be the main focus for investors,” it said.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
Related Articles:
Asia Pacific real estate transaction up 19% in Q2
Office oversupply a bigger threat than Brexit: UBS
Sentiment in APAC's commercial property sector remains cautious