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Nearly 70% of investors are interested in injecting capital into the region’s hotel industry despite the pressure of the COVID-19 pandemic on the tourism and hospitality sectors.
The Asia Pacific hotel sector is expected to see $9.45 billion (US$7 billion) in investment this year, up 20% year-on-year from $7.83 billion ($5.8 billion) last year, reported Singapore Business Review (SBR) citing JLL.
This comes as nearly 70% of investors are interested in injecting capital into the region’s hotel industry despite the pressure of the COVID-19 pandemic on the tourism and hospitality sectors.
Japan and Southeast Asia are considered the “most desirable” hotel investment destination within the region, with 52% and 46% of investors favouring them, respectively. Also viewed favourably by investors are Australia (31%) and China (22%).
“Optimism around the deployment of vaccines and an eventual recovery in tourism has started to drive activity and investors don’t want to miss the opportunity. At the same time record amounts of capital have been raised to be deployed into the real estate sector in general, including into hospitality,” said JLL’s Senior Managing Director and Head of Investment Sales for APAC Nihat Ercan as quoted by SBR.
Around one in four investors are more cautious in deploying capital citing the uncertainties on the hotel industry’s future due to COVID-19. Meanwhile, 5% of the investors plan to exit the sector altogether and look at other asset classes instead.
JLL expects the gap between the seller and buyer’s price expectation to narrow. In fact, over 80% of investors polled anticipate discounts of between 20% and 30%, while sellers are forecasted to lower asking prices by 10%.
“The past year has been all about protecting cash flow and this will continue for the coming 12 to 18 months — seasoned owners realise that now is the time to invest in existing hotels, with little displaced business,” said Xander Nijnens, managing director and head of advisory and asset management for APAC at JLL, as quoted by SBR.
“However, it is a balancing act in keeping operating costs flexible, whilst investing ahead of the recovery to edge in front of competitors and meet guest needs.”
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this story, email: victorkang@propertyguru.com.sg
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