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Hotel Investment Highlights
Asia PacificFirst Half 2019
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Top 10 Single Asset Transactions
5 OneHome Art Hotel ShanghaiShanghai, China
319 keys
Local Currency USD
Sale Price CNY 1.4 billion USD 210 million
Price per Key CNY 4.4 million USD 658,300
1 Hilton Tokyo OdaibaTokyo, Japan
453 keys
Local Currency USD
Sale Price JPY 62.4 billion USD 563.5 million
Price per Key JPY 137.7 million USD 1.2 million
2 Beijing Jade Palace HotelBeijing, China
411 keys
Local Currency USD
Sale Price CNY 2.7 billion USD 402.5 million
Price per Key CNY 6.5 million USD 979,200
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ibis Singapore NovenaSingapore
241 keys
Local Currency USD
Sale Price SGD 170 million USD 125.8 million
Price per Key SGD 705,400 USD 522,000
3 Ascott Raffles PlaceSingapore
146 keys
Local Currency USD
Sale Price SGD 353.3 million USD 261.4 million
Price per Key SGD 2.4 million USD 1.8 million
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NEXT Hotel BrisbaneBrisbane, Australia
304 keys
Local Currency USD
Sale Price AUD 104 million USD 72.8 million
Price per Key AUD 342,100 USD 239,500
4 Radegast Hotel Beijing BohaoBeijing, China
313 keys
Local Currency USD
Sale Price CNY 1.6 billion USD 242.6 million
Price per Key CNY 5.2 million USD 775,200
6 The Grand Ho Tram StripHo Chi Minh City, Vietnam
Conrad Maldives Rangali Island Ari AtollMaldives
1,082 keys
151 keys
Local Currency USD
Sale Price Confidential Confidential
Price per Key Confidential Confidential
Local Currency USD
Sale Price Confidential Confidential
Price per Key Confidential Confidential
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Finolhu Baa AtollMaldives
125 keys
Local Currency USD
Sale Price - USD 85.0 million
Price per Key - USD 680,000
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Year-To-Date June 2019Total
Transaction Volume
Average Price per Key
Note: Numbers may not tally due to rounding
59 hotel sales
12 countries
Over 9,000 keys
Asia Pacific USD 4.5 billion
USD 4.3 billion Asia
USD 0.3 billion Australasia
Asia Pacific USD 384,000
USD 400,000 Asia
USD 236,000 Australasia
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Over the past decade, private equity firms and developers have largely been the most active buyer types across the Asia Pacific region, consisting of around 37% of the total transaction volume as at year-to-date June 2019. The REITs and high-net-worth individuals were notably active in the first six months of 2019. Collectively, they comprised approximately 27% of the total transaction volume as at year-to-date June 2019, as compared to Investment activity in the first half of 2019 remained
largely on par with the first half of 2018, with year-to-date transaction volume for the period totalling USD 4.5 billion. As ever, with deal closings being weighted towards the second half of the year, we expect that the total transaction volume of 2019 will match, if not exceed, the USD 8.8 billion recorded in 2018.
Asia Pacific Hotel Transaction Volume 2008 to to YTD June 2019
Asia Pacific Transaction Volume by Buyer Type 2008 to YTD June 2019
Source: JLL Hotels and Hospitality Group, Industry Sources
Source: JLL Hotels and Hospitality Group, Industry Sources
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As investors face continued pressure to deploy capital, it is possible that some investors will adjust their risk expectations in order to generate their target returns. With macroeconomic headlines being dominated by trade tension between the US and China, uncertainty did play on investors’ minds as assets in core markets remained in vogue for those seeking opportunities in safe-haven destinations.
Introduction
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD June2019
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Asia Pacific Hotel Transaction Volume2008 to to YTD June 2019
Japan China Singapore Maldives Australia Taiwan South Korea Hong Kong
Thailand Sri Lanka Vietnam New Zealand Malaysia India Others
Source: JLL Hotels and Hospitality Group, Industry Sources
9.3% for the whole of 2018. The majority of deals during the first half of 2019 were transacted by domestic purchasers, who drove almost 80% of the total capital invested in the region. While REITs were the largest domestic buyers, private equity firms were the biggest cross-border purchasers, comprising about 27% of the total cross-border volume during the period.
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD June2019
Asia Pacific Transaction Volume by Buyer Type2008 to YTD June 2019
Private Equity Developer REIT HNWI Hotel / SA Operator Corporates Institutional Investor Others
Source: JLL Hotels and Hospitality Group, Industry Sources
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Domestic Investors most active in Japan and China
Regional Dynamics
of the total domestic transaction volume originated from Japan and China(Year-to-date June 2019)
65%
Japan
China
Japan’s hotel market recorded the highest transaction volume in the first half of the year and it continues to capture strong investor interest. In particular, Japanese REITs have been very active and accounted for almost half of the total USD 1.4 billion invested in the Japan market as at year-to-date June 2019. Benefiting from access to low borrowing costs, demand from Japanese institutions is underpinned by expectations of continued market growth, on the back of the incoming wave of large-scale events into the country, such as the 2019 Rugby World Cup, 2020 Tokyo Olympics and the 2025 World Expo.
In light of the string of upcoming large-scale events in Japan, investors are capitalising on the predicted increase in accommodation demand. In the first half of 2019, the 453-room Hilton Tokyo Odaiba Hotel, which is located within the vicinity of the various event venues of the 2020 Olympic Games, was sold for a reported USD 563.5 million to Japan Hotel REIT Investment Corporation.
During the period, Japan Hotel REIT also purchased the Hotel Oriental Express Osaka Shinsaibashi for USD 25.2 million, while Hoshino Resorts REIT purchased three hotel properties: Hotel Nirakanai Iriomotejima, Hoshino Resorts KAI Alps and Hotel Nikko Kochi Asahi Royal for an estimated total of USD 80.6 million. In the second half of 2019, at least three hotel transactions valued at more than USD 100 million each are expected to conclude, thereby further boosting the overall investment volume.
As hotel investment opportunities in Japan continue to be hotly contested by both domestic and regional
Despite the ongoing trade tension, China emerged as the second most liquid market after Japan, with China comprising about 25% of Asia Pacific’s total investment volume as at year-to-date June 2019. With the domestic economy staying strong, we do not expect the wider trade headlines to dampen investment activity in the short-term.
In the first quarter of 2019, internet giant JD.com acquired the 411-room Beijing Jade Palace Hotel for around USD 400 million - approximately USD 979,000 per key. The property is slated to be converted to an office and innovation centre, continuing the trend which has been witnessed over recent years where investors seek to extract value from typically older hotel properties through alternative use.
As deals continue to be driven by GFA pricing, foreign investors are likely to be priced out of the hotel market given the generally low yield profile of transactions. However, foreign investors, particularly owner-operators, do continue to seek assets in Tier 1 markets, although it is likely that market forces and the lack of opportunity will push them towards well-performing secondary markets, such as Xi’an, Chengdu and Suzhou.
Singapore
As evidenced by strong activities in the land sale market, Singapore was a notable beneficiary of the flight to safety. The city-state saw a number of transactions closing or being announced during the first six months of 2019. Several hotels are currently under private negotiation and we expect the transaction volume in Singapore to exceed USD 800 million by the end of 2019, making it one of Asia’s most active investment markets. If achieved, this will be the first time since 2013 when transaction volume in Singapore will cross the half-billion-dollar mark. Notable transactions as at year-to-date June of 2019 include the 241-room ibis Singapore Novena sold for USD 125.8 million, and the 146-room Ascott Raffles Place Singapore sold for USD 261.4 million.
South Korea
Having firmly established itself as a key regional investment destination for hotel investors in 2018 following a number of headline transactions, South Korea continued to draw investment appetite during the first half of 2019. This includes the recent sale of the 224-room Holiday Inn Express Seoul Euljiro, which was sold for USD 50.7 million - around USD 226,500 per key. It is expected that trading volumes will increase in tandem with the increase in trading performance. Moreover, the freehold nature of the market, as well as the country’s continued growth in international visitation, are expected to fuel investors’ interest.
Thailand
A perennially liquid market, Thailand experienced a reduction in investor activity during the period leading up to the eventual March 2019 general election, as some investors maintained a wait-and-see attitude despite active investor enquiries. With the election now behind, we expect an uptick in deal activities in the Kingdom again, as Bangkok continues to be high on the list of key places to invest for hotel investors. This includes the sale of the 268-room Four Points by Sheraton Bangkok Sukhumvit Soi 15, which was in exclusivity with a Malaysian company that has multiple hotel interests in Asia Pacific.
Australia
Traditionally a hotbed for overseas investors, domestic buyers dominated the Australian hotel investment scene in the first half of 2019, comprising around 78% of the total USD 388.2 million invested. During the period, domestically traded hotel properties included the 304-room NEXT Hotel Brisbane sold for around USD 72.8 million; the 169-room Hilton Surfers Paradise sold for USD 49.5 million; the 114-room MACq 01 Hotel sold for USD 33.6 million; and the 170-room Mayfair Hotel Adelaide and 69-room Adabco Boutique Hotel sold to Elanor for around USD 70 million. A notable cross-border transaction during the period included the purchase of the 150-room Felix by 8hotels at Sydney Airport by Singapore’s Ascott REIT for USD 42.4 million, which has since been rebranded as Citadines Connect Sydney Airport.
Outlook on Investment SentimentLooking ahead, we expect investors to look at the Asia Pacific region to factor into their valuation assumption, less upside in income; however, with the government bond returns looking slim and interest rates potentially falling during the second half of 2019, there is expected to be a little adjustment in yield expectations across the region. Notwithstanding the more cautious backdrop, the attractive yield profile of the hotel asset class and record levels of capital on the side-lines are anticipated to drive hotel investment momentum in the region.
Maldives
Conventionally dominated by Asian investors, the Maldives is now attracting new sources of cross-border capital from outside of the Asia Pacific region. Two transactions have concluded in the first six months of 2019, namely the 151-room Conrad Maldives Rangali Island which was sold to global private equity firm, Blackstone, as well as the 125-room Finolhu Baa Atoll which was sold for approximately USD 85.0 million to German-based Seaside Hotels. There are several other deals in the pipeline and by the end of 2019, we estimate transaction activity in the Maldives to reach close to
groups, and properties are available for sale in the major cities of Tokyo and Osaka, we expect to see investors exploring opportunities in smaller cities and resort areas which are increasingly benefitting from Japan’s growth in international visitation.
USD 500 million and total transaction volume across the Indian Ocean to exceed USD 600 million, in what will be a best ever in terms of transaction volume for the region.
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Properties for Sale
Patong Heritage Hotel (For Sale or For Lease)Phuket, Thailand
Paul Chakkrit+66 89 815 2272
Amilla Fushi MaldivesBaa Atoll, Maldives
Charlie MacIldowie+65 8646 4188
Natai Beach Resort & SpaGreater Phuket, Thailand
Paul Chakkrit+66 89 815 2272
Regis Bay Hotel DanangDanang, Vietnam
Adam Bury+65 8313 4600
Maduzi Hotel (For Sale or For Lease)Bangkok, Thailand
Paul Chakkrit+66 89 815 2272
Commonwealth St HotelSydney, Australia
Andrew Langsford+61 422 577 415
1312
Properties for Sale
Mantra MacArthurCanberra, Australia
Andrew Langsford+61 422 577 415
Midnight HotelCanberra, Australia
Mark Durran+61 412 248 243
Abode Hotel PortfolioCanberra, Australia
Mark Durran+61 412 248 243
Tom Gibson+61 437 538 888
Elysian Retreat, Great Barrier ReefGreat Barrier Reef, Australia
Tom Gibson+61 437 538 888
Dunk Island, Great Barrier ReefGreat Barrier Reef, Australia
1514
Major Properties sold by JLL
Koh Yao Yai Land (Phuket Long Island)Greater Phuket, Thailand
90 raiSale Price Confidential
Finolhu MaldivesBaa Atoll, Maldives
125 roomsUSD 85.0 million
USD 680,000 per Key
Conrad Maldives Rangali IslandSouth Ari Atoll, Maldives
151 roomsSale Price Confidential
Felix by 8hotels at Sydney Airport (Citadines Connect Sydney Airport) Sydney, Australia
150 roomsUSD 42.4 million
USD 282,800 per Key
MACq 01Hobart, Australia
114 roomsUSD 33.6 million
USD 294,700 per Key
NEXT Hotel BrisbaneBrisbane, Australia
304 roomsUSD 72.8 million
USD 239,500 per Key
NEXT Hotel MelbourneMelbourne, Australia
255 roomsSale Price Confidential
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Contact Us to Achieve your Hotel AmbitionsAsia
Singapore Office
Mike BatchelorChief Executive Officer, Asia [email protected]
Nihat ErcanManaging DirectorInvestment Sales, Asia [email protected]
Adam BurySenior Vice PresidentInvestment Sales, [email protected]
Charlie MacildowieVice PresidentInvestment Sales, [email protected]
Australasia
Sydney Office
Craig CollinsChief Executive Officer, Australasia [email protected]
Mark DurranManaging DirectorInvestment Sales, [email protected]
Andrew LangsfordSenior Vice PresidentInvestment Sales, [email protected]
Hong Kong Office Thailand Office China Office
Corey HamabataSenior Vice PresidentInvestment Sales, [email protected]
Paul ChakkritSenior Vice PresidentInvestment Sales, [email protected]
Ling Wei Tan Vice PresidentInvestment Sales, [email protected]
Melbourne Office Brisbane Office New Zealand Office
Peter HarperExecutive Vice PresidentInvestment Sales, [email protected]
Tom GibsonSenior Vice PresidentInvestment Sales, [email protected]
Nick ThompsonVice PresidentInvestment Sales, [email protected]
Japan Office
Tom SawayanagiSenior Managing DirectorInvestment Sales, Japan [email protected]
Yasokazu TeradaManaging DirectorInvestment Sales, [email protected]