Asia Pacific hotel investments are expected to total $12.2 billion for the full year 2024 as an influx of investment activity, a more favorable interest rate environment, and generally supportive macro and microeconomic developments will positively impact regional sentiment in the sector.
Hong Kong hotel investment market remains active this year, but buyers have become more selective, opting for city center hotels in prime locations. JLL forecasts volumes of approximately $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 incentivize 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 totaled $9.05 billion, rising 15% year-on-year ($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 also commented, “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 $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 pullback 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 the most attractive hotel markets being Japan, Mainland China, Australia, Korea, Singapore, India and Thailand. “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.
