Friday, 16 Apr 2021

7 in 10 plan to invest more in regional hotels this year: Poll

SINGAPORE (THE BUSINESS TIMES) – Over 70 per cent of investors plan to put more money in the Asia-Pacific hotel sector this year, a new poll by JLL showed this week.

The property consultancy expects about US$7 billion (S$9.4 billion) in regional hotel investments this year, 20 per cent more than last year’s US$5.8 billion.

The long-term confidence comes despite the impact from Covid-19, with the pandemic hurting the tourism industry as limits on international travel remain largely in place.

Mr Nihat Ercan, head of investment sales for the Asia-Pacific at JLL Hotels & Hospitality Group, said investors see the industry on “the cusp of a period of recovery”.

“Optimism around the deployment of vaccines and an eventual recovery in tourism has started to drive activity, and investors do not want to miss the opportunity,” he said.

That being said, a quarter of the investors polled are still waiting for clarity on the industry’s recovery before committing any more funds, while 5 per cent are looking to exit the sector and focus on other asset classes.

Investments will also be allocated to asset management initiatives on existing properties, including renovations, repurposing and repositioning in response to changing consumer preferences.

“There are deals to be done in the current environment, yet value-add players will have the upper hand as they are willing to roll up their sleeves to invest and reposition hotels with a view to selling them in three to five years,” said Mr Xander Nijnens, head of advisory and asset management for the Asia-Pacific at JLL Hotels & Hospitality Group.

JLL also predicts that the price-expectation gap between buyers and sellers will narrow. Investors are anticipating discounts of 20 per cent to 30 per cent, while sellers are expected to lower asking prices by 10 per cent.

This is because distress becomes less likely, while sellers “come to terms” with the impact of operating cash flow on pricing, JLL said.

Based on JLL’s survey of 100 clients in January, most showed interest in Japan (52 per cent) and South-east Asia (46 per cent), with Australia (31 per cent) and China (22 per cent) following behind.

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