Asia Pacific hotel transactions declining as activity becomes constrained

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Hotels in asia

In a report by CBRE on third quarter 2018 hotel activity, investment transaction volume was observed to decline as activity was constrained by lack of stock for sale.

CBRE Hotel transaction turnover




In summary

  • Korea investment activity recovered as several mid-range hotels change hands amid heightened interest from local and foreign investors
  • Both local and foreign investors see Thailand as an interesting investment destination
  • Shortage of assets for sale in Japan resulted in few small and medium related party deals
  • Quality assets remain tightly held in Hong Kong, resulting in few transactions
  • Sentiment is strengthening in Singapore as hotel performance came in solidly amid growth in tourism arrivals
  • Lack of stock for sale in Australia resulted in low deal volume despite investor interest

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Hong Kong

  • Local buyers displayed robust demand but only a few small transactions were recorded
  • Interest from domestic purchasers remain strong
  • Foreign investors continue to seek for opportunities but high asking prices and low yields are inhibiting activity
  • Hanison Construction purcahsed Citadines Harbourview Hong Kong from Capitaland for US$93m
  • Citywide occupancy at 89.2% in September
  • RevPAR at HKD 1,316 (USD 189) in Sep, compared to HKD 1,198 (USD 174) a year earlier
  • Overall ADR at HKD 1,480 (USD 168) in Sep 2018, compared to HKD 1,363 (USD 153) a year earlier



Japan

  • Activity dominated by domestic buyers
  • REITs were active buyers, with several groups acquiring hotel properties from their sponsors
  • Local private funds were seeking opportunities but did not buy anything in the quarter
  • Invincible investment corp bought 2 hotels for US$305m
  • Overall ADR at JPY 15,315 (USD 136) in Sep, up from JPY 14,751 (USD 131) a year earlier
  • Nationwide occupancy at 84.1%
  • RevPAR at JPY 12,480 (USD 114) in Sept, up from JPY 12,385 (USD 110) a year earlier

Korea

  • Acquisitions made mainly by local buyers
  • Japanese hotel operators entering Seoul in partnerships with local investors
  • YoJin Construction and K Clavis partnered to purchase Hotel Capital for KRW 140b. Buyers plan to renovate and operate property themselves.
  • KKR invested in a mixed-use development in Gangnam, which will include a 5-star hotel.
  • Capstone Asset Mgmt bought Ninetree Hotel MD for US$56m
  • ADR at KRW 154,513 (USD 137) in Sept, up from KRW 153,393 (USD 136)a year earlier
  • Occupancy at 63.6% in Sept
  • RevPAR at KRW 98,144 (USD 87) in Sept, down from KRW 102,674 (USD 91) a year earlier

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Singapore

  • Domestic investor demand remains strong.
  • Several small assets transacted. Lack of stock remains major challenger.
  • Local buyers focusing on overseas markets such as Thailand and Australia
  • S-REITs were inactive as low hotel yields made purchase difficult
  • No major transactions completed in the quarter.
  • Overall ADR at SGD 277 (USD 202) in Sept, up from SGD 266 (USD 194) a year ago
  • Overall occupancy at 82.8% in Sept
  • Overall RevPAR at SGD 229 (USD 167) in Sept, up from SGD 215 (USD 157) a year ago



Thailand

  • Singha Estate purchased 6 hotels from Outrigger
  • Foreign investors from Singapore bought Surf Hotel Patong in Phuket from KW Development
  • High net worth investors and Thai families said to be keen to increase their hotel exposure by buying or developing their own properties
  • ADR at THB 3,825 (USD 116) in Sept, up from THB 3,726 (USD 113) a year ago
  • Nationwide occupancy at 76.4%
  • RevPAR at THB 2,935 (USD 89), up from THB 2,572 (USD 2,572) a year ago

Vietnam

  • Japanese, Korean and Chinese-based capital form majority of overseas investor demand
  • Buyers increasingly considering coastal cities like Danang and Na Trang
  • Local property companies that were focused on the residential sector are entering the hospitality sector. Their focus is on high quality hotels in up-and-coming cities such as Can Tho and Phan Thiet.
  • Nationwide ADR at VND 3m (USD 127), up from VND 2.8m (USD 120) a year ago.
  • Nationwide occupancy at 71%
  • RevPAR at VND 2.1m (USD 90m), up from VND 2m (USD 85m) a year ago

Australia

  • Tight availability means bulk of interest remains in mid-tier small assets
  • Asian groups continue to dominate activity
  • iProsperity purchased 5-star Pullman on the Park in Melbourne
  • Legend Land’s acquired Ibis Styles brisbane for approximately AUD 100m in an off-market transaction
  • Developers displaying solid interest in sites for new hotel development
  • Private Asian individuals and buyers have been active
  • Nationwide ADR at AUD 198 (USD 144) in Sept, up from AUD 195 (USD 142) a year ago
  • Nationwide occupancy at 76.5%
  • RevPAR at AUD 151 (USD 110), up from AUD 147 (USD 107) a year ago
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