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Saturday, December 2, 2023

Investors seeking more Asia Pacific hotel assets in 2021

Investors are confident in the long-term future of the Asia Pacific hotels market despite ongoing COVID-19 pressure on the tourism and hospitality sectors, said real estate consultancy firm JLL. 

According to investors surveyed by JLL, approximately 70% say they are bullish on the Asia Pacific hotel market and are interested in deploying capital into the sector in 2021.

Gap between buyer and seller will narrow

JLL is forecasting approximately $7 billion in transactions in 2021, an increase of 20 percent year-on-year, up from $5.8 billion in 2020. While sizable pools capital are ready to be deployed, pricing and financing will become a larger consideration for investors. 

According to JLL, the gap between buyer and seller price expectations will narrow as distress becomes less likely, while sellers come to terms with the impact of operating cash flow on pricing. Over 80 percent of investors surveyed are eyeing discounts of 20 to 30 percent, while sellers are expected to move roughly 10 percenty in asking prices.

Most desirable hotel markets

Japan (52 percent) and Southeast Asia (46 percent) are emerging as the most desirable hotel investment markets in Asia Pacific, owing to strong demand dynamics and positive long-term fundamentals. Investors also view Australia (31 percent) and China (22 percent) favorably.

“The cycle has been reset and we are now on the cusp of a period of recovery,” said Nihat Ercan, senior managing director, JLL hotels & hospitality group. “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.” 

Tourism pick up seen

In the Philippines, while the hospitality industry was one of the most heavily affected sectors in 2020, hotel operators are optimistic that the hospitality sector will soon transition to a period of recovery. 

“Most hotels operators are trying to determine the best estimated return of airline traffic,” said P. Ryan Isip, JLL Philippines’ head of capital markets. “Hotels definitely see tourism picking up as soon as flight restrictions are lifted—it is only a matter of timing, which is heavily dependent on the roll-out of the COVID-19 vaccine. Local tourism and staycations are also being encouraged to push demand.” 

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