(23 October 2024, Hong Kong) Asia Pacific hotel investments are expected to total USD 12.2 billion for the full year 2024 as an influx of investment activity, a more favourable interest rate environment, and generally supportive macro and microeconomic developments will positively impact regional sentiment in the sector. According to analysis by JLL, full year Asia Pacific hotel investment volumes in 2024 are anticipated to grow by 4.3% over 2023, which totalled USD 11.7 billion.
Hong Kong hotel investment market remains active this year, but buyers have become more selective, opting for city centre hotels in prime locations. JLL forecasts volumes of approximately USD 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.
Oscar Chan, Head of Capital Markets at JLL in Hong Kong, said: “Currently, Hong Kong is experiencing high vacancy rates in many hotels, particularly in the three- and four-star categories, largely due to changing tourist consumption patterns. The latest Policy Address introduced a pilot scheme to incentivise the conversion of hotels into student accommodation by streamlining the application process for planning, lands and building plans, so as to encourage the market to convert hotels into student hostels on a self‑financing and privately‑funded basis. This move is expected to stimulate investment interest, attracting more developers and investors to participate and inject new vitality into the market.”
In the first nine months of 2024, cumulative transaction volumes totalled USD 9.05 billion, rising 15% year-on-year (USD 7.87 billion in 2023) and representing 90% of the volume of 2019. Led by Japan, cross-border investment surged in year-to-date September 2024 driven by large transactions in Asia, while Australia experienced a rare lull in annual activity.
Nihat Ercan, CEO, Hotels & Hospitality Group, Asia Pacific at JLL, said, “A combination of broader economic factors, including a positive regional macroeconomic outlook, supportive interest rate policies, and strong consumption trends, gives us confidence that full-year hotel investment will comfortably surpass last year’s figures. Investors have consistently shown a strong appetite for larger investments in the Asia Pacific hotel sector, and we see no signs of activity waning in the last quarter of 2024. Consequently, we have increased our investment volume forecast to USD 12.2 billion.”
JLL analysis confirms that average daily rates (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 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 several 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 of USD 3.8 billion. Given that investor interest is unlikely to wane, JLL forecasts total sales of USD 4.7 billion for 2024, followed by an increase of 4% in 2025 at USD 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.
Mainland China: Investment in Mainland China’s hotel space totalled USD 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 expected to reach USD 2.1 billion for the full year.
Australia: Australian sales volumes will remain relatively subdued over 2024, JLL analysis suggests. Year-to-date volumes have totalled USD 629 million (settled), down 38% from the same period last year. JLL estimates that total transaction volumes should reach approximately USD 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 USD 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 an estimated transaction volume of around USD 1.3 billion for the full year 2024.
Singapore: With a tourism industry that is 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 years totals leading JLL to project cumulative hotel investment volume for the full year to be approximately to USD 1 billion.
India: Transaction volumes have multiplied from USD 76 million in 2022 to USD 337 million in 2023 and are forecast by JLL to stand at USD 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 USD 404 million, with a projected full-year volume of over USD 450 million. JLL anticipates 2025 to be on par or better than the 15-year average of USD 300 million in transactions, bolstered by expected lower interest rates and positive tourism sentiment from visitors around the region.
“Factors including the fluctuating currency exchange against the US dollar has helped attract foreign investors since H1 2023. The welcome surge in robust 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,” said Ercan.
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