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.
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