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Hotels & Hospitality Group | July 2017 Hotel Investment Highlights Asia Pacific H1 2017

Hotel Investment Highlights Asia Pacific H1 2017 - JLL APAC Hotel... · Hotel Investment Highlights Asia Pacific H1 2017. ... 396 AUD 580,808 $431,818 Rooms ... Midscale Sale Price

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Hotels & Hospitality Group | July 2017

Hotel Investment Highlights Asia Pacific H1 2017

Newton Place Hotel Kwun TongHong Kong, China

Midscale HKD $2.3 billion $299 millionSale Price

USD

597 HKD $3.9 million $500,838Rooms

Price per key

LocaL cUrrency

Midscale HKD $1.7 billion $218.5 millionSale Price

USD

438 HKD $3.9 million $498,927Rooms

Price per key

The Bay Bridge HotelHong Kong, China

LocaL cUrrency

Hilton South WharfMelbourne, Australia

Upscale AUD $230 million $171 millionSale Price

USD

396 AUD 580,808 $431,818Rooms

Price per key

LocaL cUrrency

Newton Inn North PointHong Kong, China

Midscale HKD $1.1 billion $143 millionSale Price

USD

317 HKD $3.5 million $451,104Rooms

Price per key

LocaL cUrrency

Four Points by Sheraton Central ParkSydney, Australia

Upscale circa. AUD $190 million circa. $142.2 millionSale Price

USD

297 circa. AUD $639,731 circa. $478,902Rooms

Price per key

LocaL cUrrency

Top 10Single Asset Transactions

H1 2017

Nine Tree Premier Hotel Myeongdong IISeoul, South Korea

Midscale KRW $132.6 billion $118 millionSale Price

USD

408 KRW $324.9 million $289,189Rooms

Price per key

LocaL cUrrency

Swissotel Nai Lert ParkBangkok, Thailand

Upscale THB $4.1 billion $114.4 millionSale Price

USD

336 THB $12.1 million $340,508Rooms

Price per key

LocaL cUrrency

InterContinental Double BaySydney, Australia

Luxury circa. AUD $140 million circa. $104 millionSale Price

USD

140 circa. AUD $1 million circa. $742,857Rooms

Price per key

LocaL cUrrency

Grace Land InternationalShanghai, China

Midscale CNY $610 million $91.5 millionSale Price

USD

138 CNY $4.4 million $633,043Rooms

Price per key

LocaL cUrrency

Sukhumvit 27Bangkok, Thailand

Unfinished THB $2.4 billion $70.3 millionSale Price

USD

342 THB $7 million $204,474Rooms

Price per key

LocaL cUrrency

hotel deals in countries

286

5,000

H1 2017

Over keys traded across Asia Pacific

ASIA PACIFIC

$2.9 billion

ASIA PACIFIC

$486,600

ASIA

$2.5 billion

ASIA

$490,600

AUSTRALASIA

$0.4billion

AUSTRALASIA

$464,200

Total Investment Volume

Average Price per Key

Note: All currencies are USD.

Hotel Investment Highlights H1 2017Asia Pacific investment volume into hotels during H1 2017 totalled just above USD 2.9 billion. Buying opportunities have been limited with a dearth of investment grade hotels on the market.

Several hotels have transacted in Hong Kong and Bangkok which have been acquired by developers for future alternative uses, such as residential conversion.

Asian buyers in particular are focusing on Australia, New Zealand, Japan and Singapore. These markets are highlighted amongst others for their long term positive tourism fundamentals.

Hotel owners remain typically unmotivated to dispose strong performing assets. A dilemma for many vendors is what to do with their capital returns after they sell.

Hotel investors continue to seek opportunist ic investments in key emerging tourism markets such as Vietnam. However, disconnect between buyer and seller expectations is limiting deal flow.

The introduction of outbound capital restrictions within China in late 2016 has impacted the hotel investment market within Asia Pacific and globally during the first half of 2017.

Hong Kong and Australia have been the stronger performers within the region in terms of inbound

Asia Pacific Total Transaction Volume By Quarter (2007 – 2017)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Q1

2007

Q

2 20

07

Q3

2007

Q

4 20

07

Q1

2008

Q

2 20

08

Q3

2008

Q

4 20

08

Q1

2009

Q

2 20

09

Q3

2009

Q

4 20

09

Q1

2010

Q

2 20

10

Q3

2010

Q

4 20

10

Q1

2011

Q

2 20

11

Q3

2011

Q

4 20

11

Q1

2012

Q

2 20

12

Q3

2012

Q

4 20

12

Q1

2013

Q

2 20

13

Q3

2013

Q

4 20

13

Q1

2014

Q

2 20

14

Q3

2014

Q

4 20

14

Q1

2015

Q

2 20

15

Q3

2015

Q

4 20

15

Q1

2016

Q

2 20

16

Q3

2016

Q

4 20

16

Q1

2017

Q

2 20

17

Mill

ions

(USD

)

Asia Australasia

investment with robust tourism growth and solid trading performance driving the focus for Australia.

In Hong Kong, there were eight individual deals amounting to almost 2,000 rooms that sold for a combined total of HKD 8.6 billion.

Australia was again active with a number of key transactions across Sydney and Melbourne. After a strong 2016, New Zealand investment activity was limited with just a couple of smaller transactions in locations outside of the major cities.

With the exception of the InterContinental Sydney Double Bay selling for circa. AUD $140 million (the highest value recorded for a suburban hotel in Sydney), the majority of deals in Australia have transpired in Melbourne.

The recently opened International Convention Centre will provide a further boost to Sydney’s hotel trading performance and MICE industry. The limited new room supply entering the market over the coming years is welcome as citywide occupancy is running at close to 90%.

Given the low interest rate environment, sound economic growth outlook and weaker Australian dollar, transaction activity is expected to continue throughout the year.

Source: JLL

The InterContinental Sydney Double Bay was acquired by Zobon Real Estate and Shanghai United making it the first five-star Sydney deal since the sale of the Westin Sydney hotel in 2015. Both deals were brokered by JLL.

InterContinental Sydney Double Bay

In Thailand, the Swissotel Nai Lert Park was sold for circa. THB 4 billion and will be redeveloped as a holistic service medical centre. JLL acted as exclusive advisor to Principal Capital PLC for the transaction of an unfinished hotel development project known as “S27” in Bangkok to Carlton Hotel Bangkok Co., Ltd. for THB 2.4 billion. Located in the exclusive Asoke / Phrom Phong precinct, the 34-storey hotel structure with 342 keys included a BOI incentive for 100% foreign ownership.

There are typically only a couple of arms-length transactions per year in South Korea, particularly as many hotels are owned and operated by local Korean conglomerates. However, going against the trend was the late - 2016 deal of the Conrad Seoul Hotel, part of the IFC complex deal by AIG Global Real Estate to a joint venture between Brookfield Asset Management and China Investment Corp.

The rapid expansion of limited service hotels across Seoul, driven by Chinese inbound tourism growth over recent years, has also helped generate deals of midscale category properties. A recent transaction includes the Nine Tree Premier Hotel Myeongdong II that was sold for KRW 132.5 billion.

Cap rates in Japan are at their lowest in almost a decade reflecting strong investor demand and the nation's zero interest rate policy. Tourism fundamentals remain strong although trading performance is flat given the yen appreciation against other currencies.

A i r b n b a n d o t h e r a l t e r n a t i v e a c c o m m o d a t i o n operators are impacting larger cities. A positive for the accommodation industry is the legislative bill passed by the National Diet of Japan in June 2017. This now outlaws illegal operators from 2018.

For the first time since 2013, no Japanese transactions have factored in the “Top 10” although JLL still recorded just above JPY 26 billion in deals during H1 2017. One of the largest was Ken Real Estate Lease Ltd acquisition of the Rihga Royal Gran Okinawa from Morgan Stanley.

Overall, hotel investors remain committed to identifying emerging tourism markets (given the lack of opportunities in gateway cities) where the long term fundamentals for arrivals growth are strong and the demand - supply balance is not heavily outweighed by new hotels.

0

2

4

6

8

10

12

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD 2017

FORE

CAST

2017F

Billi

ons (

USD

)

AP Forecast Balance Singapore Indonesia New Zealand India Hong Kong Taiwan Vietnam Maldives Thailand Malaysia South Korea China Australia Japan

Asia Pacific Total Transaction Volume By Country (2007 – 2017)

Hotel Investment Highlights H1 2017

Source: JLL

Hotel Investment Highlights H1 2017

Asia Pacific Price Per Key (2000 – 2017)

0

100,000

200,000

300,000

400,000

500,000

600,000

0

2,000

4,000

6,000

8,000

10,000

12,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

H1

2016

H1

2017

Pric

e pe

r Key

(USD

)

Mill

ions

(USD

)

Australasia Asia

Price per Key Asia Price per Key Australasia

Source: JLL

Sukhumvit 27 in Bangkok sold to Carlton Hotel Bangkok Co., Ltd. for THB 2.4 billion. JLL acted as sole broker.

S27

Properties for Sale

Mike Batchelor+66 81 984 8970

[email protected]

Thailand Hotel Portfolio Phuket, Khao Lak & Koh Samui, Thailand

Karan Khanijou+66 81 497 7566

[email protected]

Apple A Day ResortKrabi, Thailand

Adam BuryCEA Registration: R055761J

+65 6494 [email protected]

Swiss-Inn Johor Bahru Johor Bahru, Malaysia

Adam BuryCEA Registration: R055761J

+65 6494 [email protected]

Swiss-Garden Beach ResortKuantan, Malaysia

Nihat ErcanCEA Registration: R021965J

+65 6494 [email protected]

Luxury Resort Republic of Seychelles

Nihat ErcanCEA Registration: R021965J

+65 6494 [email protected]

Banyan Tree Seychelles Mahé Island, Republic of Seychelles

Jones Lang LaSalle Property Consultants Pte Ltd CEA License No.L3007326E

Nihat ErcanCEA Registration: R021965J

+65 6494 [email protected]

Luxury Bali Resort Bali, Indonesia

Peter Harper +61 412 560 246

[email protected]

Travelodge Hobart Hobart, TAS

Paul Chakkrit+66 89 815 2272

[email protected]

17.8-hectare Beachfront Site on Kood Island Trat, Thailand

Nihat ErcanCEA Registration: R021965J

+65 6494 [email protected]

Freehold Hotel in Osaka Osaka, Japan

Nihat ErcanCEA Registration: R021965J

+65 6494 [email protected]

Marriott Weligama Bay Resort & SpaWeligama, Sri Lanka

Peter Harper +61 412 560 246

[email protected]

Adina Grand West MelbourneMelbourne, VIC

Nihat ErcanCEA Registration: R021965J

+65 6494 [email protected]

Lagoon in the MaldivesMalé Atoll, Republic of Maldives

Peter Harper +61 412 560 246

[email protected]

131-133 Murray Street, PyrmontSydney, NSW

JLL’s Hotels & Hospitality Group has completed more transactions than any other hotels and hospitality real estate advisor over the last five years, totalling more than $68 billion worldwide. Between negotiating the world’s most extraordinary, enticing, and profitable property deals, the group’s 350-strong global team also closed more than 4,400 advisory, valuation and asset management assignments. Investors worldwide turn to JLL to shape their strategies, tailor their portfolios and maximise the value of their assets. We are recognised as the global leader in real estate services across hospitality properties of all shapes and sizes. Our expert advice is backed by industry-leading research. We apply our broad spectrum of hotel valuation, brokerage, asset management and consultancyservices through every phase of the hotel lifecycle. We have helped more hotel investors, owners and operators achieve high returns on their assets than anyother real estate advisor in the world. Whether you are looking for a hotel or you’re ready to sell, we’ll use our capital markets expertise, hospitality industryknowledge and global relationships to put the right parties together and execute a bespoke deal that exceeds your objectives. For more news, videos and research from JLL’s Hotels & Hospitality Group, please visit: www.jll.com/hospitality, download the Hotels & Hospitality Group app for iOS and Android, or view our e-magazine The Hotel Investor, available for iPad. Jones Lang LaSalle’s Hotels & Hospitality Group Singapore CEA Licence: L3007326E Note: All currencies are USD unless otherwise mentioned. Exchange rate correct as at date of sale.

www.jll.com/hospitality

Key ContactsCraig CollinsChief Executive Officer Australasia

[email protected]

Mark DurranManaging Director Investment Sales Australasia

[email protected]

Troy CraigManaging Director Strategic Advisory Asia Pacific

[email protected]

Nihat ErcanManaging Director Investment Sales Asia

[email protected]

Frank SorgiovanniHead of Research Asia Pacific

[email protected]

Scott HetheringtonChief Executive Officer Asia

[email protected]

Cover photo: Felicite Island, Republic of Seychelles

Mike BatchelorInternational Director Head of HHG Investment Sales Asia

[email protected]

Tom SawayanagiInternational Director Head of HHG Japan

[email protected]