Asia Pacific Hotel Trends

Transcription

1 Asia Pacific Hotel Trends Transaction volume increases by 8% y-o-y to US$2.8 billion Demand remains firm but deal flow hampered by availability Upbeat markets led by Vietnam and Thailand Sentiment improves in Singapore Inter-Korea summit brightens outlook Activity slows in Hong Kong and Japan due to lack of stock for sale

2 Contents 3 Overview 7 Singapore 4 Hong Kong 8 Thailand 5 Japan 9 Vietnam 6 Korea 1 Australia CBRE Research 218 CBRE, Inc. 2

3 21 Q1 211 Q1 212 Q1 213 Q1 214 Q1 215 Q1 216 Q1 217 Q1 218 Q1 US$ billion US$ billion Overview Asia Pacific hotel transaction volume increased by 8% y-o-y to US$2.8 billion in. Virtually all markets saw strong demand from a broad range of investors but activity was constrained by the lack of stock for sale Asia Pacific Hotel Investment Turnover Asia Pacific Rolling 4 quarters total (rhs) Source: CBRE Research,. Transactions include hotel deals above US$1 million, excluding site and related transactions. Upbeat markets were led by Vietnam, where surging visitor arrivals continued to support robust demand for hospitality properties. Hotels in Thailand continued to be keenly sought after by domestic and foreign investors, supported by strong tourism numbers. In Singapore, the price gap continued to deter transactions but sentiment improved on the back of stronger hotel performance and inbound visitors. The outlook in Korea brightened following the inter-korean summit in April and an uptick in tourist arrivals during the PyeongChang Winter Olympics. Hotel transactions in Hong Kong were limited in with quality assets remaining tightly held and pricing still posing a considerable barrier. In Japan, investors displayed solid demand for hotel properties but very few major transactions were recorded due to the lack of assets for sale. CBRE Research 218 CBRE, Inc. 3

4 Hong Kong Hotel transactions were limited in with quality assets remaining tightly held and pricing continuing to pose a considerable barrier Property Companies Corporations Demand from local buyers remained robust but only a few smaller deals were recorded. Some local buyers are considering properties offering returns of just circa 3%. High prices and lower yields compared to other markets continue to deter interest from foreign buyers, although many groups retain a long-term interest in Hong Kong. Local property companies with existing hospitality businesses comprised the majority of demand. Many buyers appear to be targeting land rather than buildings, with a few transactions this quarter involving smaller hotels and service apartments that could potentially be redeveloped into office properties. Traditional hotel developers retain a robust appetite for land for new hotels but the availability of suitable plots is slim. Visitor numbers in rose by 9.6% y-o-y, led by a 12.6% y-o-y jump in Mainland Chinese. Overall stood at US$ (HKD 1,425) in March 218, an increase on the US$ (HKD 1,389) recorded a year previously. Citywide occupancy stood at 89% in March. stood at US$ (HKD 1,276) in March, an increase on the US$ (HKD 1,187) recorded a year previously. Source: STR., occupancy and figures are 12 month MAT. Hotel valuations are rising following the positive improvement in performance for most assets in 217. The government is not releasing sites for new hotel development, preferring instead to encourage new office projects due to the acute shortage in this sector. No major hotel transactions were recorded this quarter. 4, 3, 2, 1, Source: CBRE Research,. Transactions include hotel deals above US$1 million. CBRE Research 218 CBRE, Inc. 4

5 Japan displayed robust demand for hotel properties but very few major transactions were recorded due to the lack of assets for sale REITs Institutions investors continued to dominate the market, completing several deals during the quarter. The period saw some new overseas investors looking at Japan, primarily at the three main markets of Tokyo, Osaka and Kyoto. More experienced groups are willing to consider other locations if higher yields are available. Despite the increase in J-REIT s stock prices this year, the door is still open to foreign investors. One related party transaction saw ORIX acquire Hotel Universal Port in Osaka for JPY 34 billion from ORIX Gold Management Corporation. Major deals included Red Planet Japan Inc s JPY 11.8 billion sale and leaseback deal with Goldman Sachs. Red Planet sold ownership rights to four hotels whilst entering into a lease-and-operate agreement with the purchaser for an initial period of 2 years. Visitor numbers in March stood at 2.6 million, an increase of 18.2% y-o-y. Overall stood at US$135.6 (JPY 14,85) in March, a decrease on the US$136.7 (JPY 14,97) recorded a year previously. Nationwide occupancy stood at 84.3% in March. stood at US$114 (JPY 12,48 ) in March, unchanged from the same period last year. Source: STR., occupancy and figures are 12 month MAT. The high number of new limited service and business hotel developments is prompting developers and landowners to consider constructing more four and five star hotels. The hotel market in major cities continues to be challenged by vacation rentals and Airbnb, along with foreign visitors growing preference to visit regional locations. Cities across Japan Hotel Portfolio JPY 11.8 bn (USD 19 mn) BUYER: Goldman Sachs 3, 2, 1, Source: CBRE Research,. Transactions include hotel deals above US$1 million. CBRE Research 218 CBRE, Inc. 5

6 Korea Market sentiment improved following the inter-korean summit in April and an uptick in tourist arrivals during the PyeongChang Winter Olympics Corporations While domestic investors still account for the majority of demand, no major deals were completed due to the slim availability of assets that are masterleased to hotel operators. Interest among foreign buyers was limited, aside from a few groups considering value-added and opportunistic investments. However, in late April Singapore-listed Ascendas Hospitality Trust paid KRW 73 billion (US$68 million) for the KY-Heritage Hotel Dongdaemun in Seoul. Overseas markets remain a key focus for local conglomerates opting to seek opportunities outside the domestic market. In April, Hotel Lotte announced that it had purchased a 1% stake in Hyundai Hotel in Vladivostok, Russia, from Hyundai Heavy Industries. Total international arrivals rose by 5.7% y-o-y in February. stood at US$ (KRW 143,37) in March, a decrease on the US$ (KRW 148,464) recorded a year ago. stood at 64% in March. stood at US$ 87.6 (KRW 92,954) in March, a decline on the US$ (KRW 15,222) recorded a year previously. Source: STR., occupancy and figures are 12 month MAT. The Inter-Korean summit held in April has been hailed as a major move towards strengthening ties between the two nations, and is encouraging overseas investors to adopt a more positive view towards Korea. It is hoped that a long term improvement in relations will result in a sustained recovery of tourist arrivals, and with it, the hospitality sector. Seoul A7 Hotel KRW 14.4 bn (USD 13 mn) BUYER: A private investor 1, Source: CBRE Research,. Transactions include hotel deals above US$1 million. CBRE Research 218 CBRE, Inc. 6

7 Singapore The price gap continued to deter transactions but investor sentiment improved on the back of stronger hotel performance and visitor arrivals REITs Property Companies There is a significant volume of domestic capital looking at the market at present but the lack of availability of assets remains a major challenge. Some local buyers are still opting to focus on overseas markets. Aside from several funds and private investors looking at the market, activity among foreign investors was limited due to vendors holding price expectations well beyond what buyers are prepared to pay. However, recent months have seen a few sellers adopt a more realistic stance towards pricing. S-REITs were inactive. Selected groups are still experiencing pressure to sell assets due to poor performance. The period saw solid demand from developers seeking sites upon which to construct new hotels, predominantly in the mid-range segment. Visitor arrivals rose by 7.3% y-o-y in the first two months of 218. Overall stood at US$ 2.5 (SGD ) in March, an increase on the US$ (SGD ) recorded a year previously. Overall occupancy stood at 81% in September. Overall stood at US$ (SGD ) in March, an increase on the US$ (SGD ) recorded a year previously. Source: STR., occupancy and figures are 12 month MAT. and increased for three consecutive months between February and April, indicating that market performance is beginning to turn. Le Meridien hotel on Sentosa has been put up for sale for the second time in two years after its owner was hit with a winding up order. Downtown Core Outram Downtown Core Hill Street SGD 118 mn (USD 89 mn) BUYER: EL Development (Ventures) Porcelain Hotel SGD 65 mn (USD 49 mn) BUYER: JL Asia Resources Beach Hotel SGD 32 mn (USD 24 mn) BUYER: Undisclosed 3, 2, 1, Source: CBRE Research,. Transactions include hotel deals above US$1 million. CBRE Research 218 CBRE, Inc. 7

8 Thailand Hospitality properties continued to be keenly sought after by local and foreign investors, supported by strong visitor arrivals Property Companies Activity remained largely driven by domestic developers and investors. Major deals included King Power purchasing the hotel and observation deck in MahaNakhon building, a mixeduse skyscraper in the Silom/Sathon central business district in Bangkok, from Pace Development Corporation. There is strong interest from foreign investors in the hospitality sector, with overseas investors permitted to own hotels in some circumstances, although no major assets changed hands this quarter. Many local developers which had previously specialised in building and selling condominiums are now diversifying into building and holding income producing assets such as serviced apartments. Developers are also pursuing new projects. During the quarter, locally listed Apex Development announced it would develop four hotels, including some with residential units for investment buyers, on land it acquired in Krabi last year. Tourist arrivals rose by 16.3% in March from a year earlier, led by visitors from China. nationwide for March was US$ (THB 3,617), an increase on the US$ (THB 3,218) recorded a year previously. March occupancy nationwide stood at 77%. for March nationwide stood at US$ 89.2 (THB 2,831), an improvement on the US$ (THB (2,432) recorded a year previously. Source: STR., occupancy and figures are 12 month MAT. The main focus among investors is still on Bangkok, with several new five star properties in the pipeline. Other key markets include the prime resorts of Phuket, Pattaya and Koh Samui. Major challenges include infrastructure, with both international airports in Bangkok still operating well above capacity. Bangkok Royal Orchid Sheraton Hotel THB 2.4 bn (USD 75 mn) BUYER: Grande Asset Hotels and Property Source: STR and CBRE Research,. Transactions include hotel deals above US$1 million. CBRE Research 218 CBRE, Inc. 8

9 Vietnam Surging visitor arrivals continued to support robust demand for hospitality properties from local and overseas investors Property Companies Corporations buyers are displaying strong demand for resort and city hotels. Some are purchasing development sites and en bloc properties on their own while others are opting to pursue joint ventures with foreign investors to gain access to capital and operational knowhow. Asian-based buyers comprise the bulk of demand from foreign groups. Major players include several Korean firms, which have been especially active in seeking hotels in large cities and resort destinations. Property developers and real estate companies from around the region continue to be lured by the comparatively higher yields available in Vietnam. International hotel operators continue to enter Vietnam, with Best Western Hotels & Resorts announcing plans to open a new BW Premier Collection beachfront resort in Vung Tau, Vietnam in 219. Visitor arrivals for the first four months of the year stood at 5.5 million, an increase of 29.5% y-o-y. March nationwide stood at US$ (VND 2.8 million), an improvement on the US$ (VND 2.7 million) registered a year previously. March occupancy nationwide was 73%. March nationwide registered US$ 91.7 (VND 2. million), an improvement on the US$ (VND 1.9 million) a year previously. Source: STR., occupancy and figures are 12 month MAT. Urbanisation in Hanoi and Ho Chi Min City is creating investment opportunities in upcoming CBDs (in Hanoi) and in emerging residential and commercial hubs such as Thu Thiem and Thao Dien (in Ho Chi Minh City). New infrastructure developments including metro line systems will improve connectivity and open up additional locations for investment. Hoi An Malibu VND 337 bn (USD 15 mn) BUYER: Bamboo Capital Source: CBRE Research,. Transactions include hotel deals above US$1 million. CBRE Research 218 CBRE, Inc. 9

10 Australia The hospitality investment market maintained steady momentum, with a number of sizable assets changing hands Property Companies Local buyers were active, with noteworthy deals including Melbournebased SB&G Hotel Group s AUD 1 million acquisition of two Watermark branded hotels in Brisbane and the Gold Coast. Tight availability means that the bulk of interest continues to be around mid-tier smaller assets in regional markets and leisure destinations. Asian groups continued to drive activity from foreign investors. Major deals included the purchase of Holiday Inn City Centre Perth for about AUD 65 million by a Singaporean private investor. There is strong demand for sites for new hotel development but availability is tight, primarily because other sectors such as office and residential offer more attractive returns. Highlights included Aligned FM purchasing the Aria Serviced Apartments in Canberra. International visitors totalled 872, during March, an increase of 13% y-o-y. Nationwide March stood at US$ (AUD 193.6), an improvement on the US$ (AUD 183.8) a year previously. March occupancy stood at 77% nationwide. March was US$ (AUD 148.6) nationwide, an improvement on the US$ 15.1 (AUD 139.3) a year previously. Source: STR., occupancy and figures are 12 month MAT. who are shut out of Sydney and Melbourne are looking at other capital cities in order to gain access to the market. Recent major openings include the Sofitel Convention Centre Hotel in Sydney and the Novotel Convention Centre Hotel in Melbourne. Perth Fraser Island Adelaide Holiday Inn AUD 65 mn (USD 51 mn) BUYER: Legend Land North White Cliffs AUD 43 mn (USD 34 mn) BUYER: Sealink Travel Group Mercure Grosvenor Hotel AUD 36 mn (USD 28 mn) BUYER: Chip Eng Seng 4, 3, 2, 1, Source: CBRE Research,. Transactions include hotel deals above US$1 million. CBRE Research 218 CBRE, Inc. 1

11 Contacts To learn more about CBRE Research, or to access additional research reports, please visit the Global Research Gateway at APAC Research Henry Chin, Ph.D. Head of Research CBRE Research, Asia Pacific APAC Hotels Robert McIntosh Executive Director CBRE Hotels Asia Pacific Jonathan Hills Senior Director CBRE Research, Asia Pacific Edmond Wong Director, Hong Kong CBRE Valuation & Advisory Services Jiahao Zhang Manager CBRE Hotels Asia Pacific Kiyoshi Tsuchiya Director CBRE Hotels Japan Wesley Milsom Director CBRE Hotels Australia Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.