APAC investment volume growing by 4.3%

INTERNATIONAL REPORT – JLL’s latest Asia Pacific Hotel Investment Highlights research for 2H24 concluded that investment in the sector will cross $12 billion for FY 2024 as an influx of investment activity, a more favorable interest rate environment and generally supportive macro and microeconomic development will positively impact sentiment in the sector regionally.

According to analysis by JLL, full year Asia Pacific hotel investment volumes in 2024 are anticipated to grow by 4.3% on 2023, which totaled $11.7 billion.

In the first nine months of 2024, cumulative transaction volumes totaled $9.05 billion, tracking up 15% year-on-year ($7.87 billion in 2023) and representing 90% of the volume of 2019. Led by Japan, cross-border investment surged in YTD September 2024 driven by large transactions in Asia, while Australia experienced a rare lull in annual activity.

“Investors have consistently shown an appetite to play larger in the hotel sector in Asia Pacific and we see no signs that activity will wane in the last quarter of 2024, making us increase our investment volume forecast to $12.2 billion,” said Nihat Ercan, CEO, JLL Hotels & Hospitality Group, Asia Pacific.

“Factors including the fluctuating currency exchange against the dollar has helped attract foreign investors since H1 2023,” Ercan continued. “The welcome surge in strong tourism fundamentals in the region since the reopening of borders to international travel has also helped bolster investor appetite. Although there are some markets that may see some short-to-medium term easing of occupancy, the overall industry has entered a new phase less defined by recovery and more linked to ideas of organic and sustainable growth.”

JLL analysis confirmed that ADRs in Asia Pacific are up 19% in local currencies versus the last cyclical peak in 2018-2019. Furthermore, most markets still have room to increase occupancy back to the same pre-pandemic highs given strong business travel offsetting some pull back in leisure travel. Concurrently, JLL believes that the last leg of occupancy may take longer to come back with MICE still slower to return and Mainland China still facing lingering economic issues in the short-term influencing overall industry performance.

On a country-basis, investment volumes were generally positive in the first nine months of 2024, with a few exceptions across the Asia Pacific region.

Japan: In the first nine months of 2024, Japan further established itself as the most attractive hotel market regionally. Activity through the end of September resulted in sales volumes at $3.8 billion. Given that investor interest is unlikely to wane, JLL forecasts in total sales of $4.7 billion for 2024, followed by an increase of 4% in 2025 at $4.9 billion. Despite the recent interest rate hike and slight appreciation of the yen, JLL anticipates Japan hospitality investment to remain active given the strong underlying supply and demand fundamentals.

China: Investment in Mainland China’s hotel space totaled $1.8 billion as of end September 2024, reflecting a 6.4% growth from the previous year. Shanghai and Beijing remained the most actively traded hotel investment markets accounting for over 50% of total transaction volumes. In terms of buyer profile, high net worth investors are still one of the more active buyers of hotel assets. The market momentum will likely continue into the last quarter of 2024, with total hotel transaction volumes to reach $2.1 billion for the full year.

Australia: Australian sales volumes will remain relatively subdued over 2024, JLL analysis suggested. Year-to-date volumes have totaled $629 million (settled), down 38% from the same period last year. JLL is estimating that total transaction volumes should reach approximately $1.1 billion for the full year, which is below the long-term average, but likely influenced by the fact that many 2024 transactions could also be classified as ‘last year’ deals.

Korea: Hotel transaction volumes reached approximately $1.1 billion in 2024 year-to-date with the Conrad Seoul comprising the largest transaction. JLL expects several additional hotels to transact before the end of the year, resulting in estimated transaction volume near $1.3 billion for the full year 2024.

Singapore: With a tourism industry firing on all cylinders, supported by mega events and high occupancy rates, Singapore’s attractiveness to investors has remained justifiably high. Deals recorded in 2024 have eclipsed the previous year’s total, leading JLL to project cumulative hotel investment volume for the full year to be approximately to $1 billion.

Hong Kong: Hong Kong remains an active market, but buyers have become more selective, opting for city center hotels in prime locations. JLL forecasts volumes of approximately $500 million in 2024, roughly 35% below 2023 levels. Given that this year’s prevalence of wide bid-ask spreads is expected to moderate and tourism in Hong Kong is poised to pick up further, 2025 is projected to see more investment activity.

India: Transaction volumes have multiplied from $76 million in 2022 to $337 million in 2023 and is forecast by JLL to land at $440 million this year. Capital has been supported by the sector’s robust performance in room rates, revenue, and occupancy levels. Outside of investment, development interest remains strong with hotel brands having signed agreements for approximately 19,500 new hotel rooms in the first half of 2024, accounting for 77% of the total number signed in 2023 in emerging metros.

Thailand: Investment volume dropped in 2023 due to a wide bid-ask spread and rising interest rates. However, in 2024, there has been a remarkable recovery in investment activity. Year-to-date transaction volumes stand at $404 million, with a projected full-year volume of over $450 million. JLL anticipates 2025 to be on par or better with the 15-year average of $300 million in transactions, bolstered by expected lower interest rates and positive tourism sentiment from visitors around the region.