Asia Pacific’s hotel investments will surpass the $11 billion threshold in 2019

Primarily driven by the booming tourism industry all throughout the region

Tourist standing by the window. Boyloso/Shutterstock

The number of hotel transactions in Asia Pacific is expected to increase around 25 to 30 percent yearly until 2019. By the end of this year, global real estate consultancy JLL has predicted the total investments to surpass the USD11 billion margin.

“Despite a cautious economic climate and wider political headwinds, hotels in Asia Pacific present an attractive yield profile amid booming tourism demand, in the context of falling interest rates and bond yields,” said Mike Batchelor, the CEO of JLL Hotels & Hospitality Asia Pacific.

He said that domestic clients, developers, and private equity firms have encouraged most of the demand in 2019, which is why they assumed that this year would be the third most highly-transacted year in the past 10 years. So far, only 2015 and 2017 have exceeded the USD11 billion threshold.

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For the first nine months of the year, investors have already bought USD7.8 billion worth of hotels in the region. The massive events in Japan, including the 2019 Rugby World Cup, 2020 Tokyo Olympic Games, and 2025 World Expo, has contributed most of the amount, achieving transaction volumes of almost USD3 billion.

“These tourism drivers will boost the need for accommodation assets, with investors looking to capitalise on the wave of demand. Japan is the region’s top-performing market and forecast to hit a record high of USD4 billion in transaction volumes this year,” said Batchelor.

Local investors were active in their home markets, especially Japan and China, but foreign buyers drove most of the region’s yield, highly encouraged by stable growth of tourism.

“As both overseas and domestic investors seek out higher-yielding opportunities across Asia Pacific, the hospitality sector will continue to shine,” said Nihat Ercan, the Managing Director and Head of Investment Sales Asia at JLL Hotels & Hospitality.

“We’re confident that this investment momentum will continue to drive the region’s hotel transaction volumes going into 2020.”