Domestic tourism has fueled the improvement in hotel performance across the APAC markets in Q2 2020. However, transactional activity has remained subdued.
Hotel investment activity remains weak
- In Q2 2020, the Asia-Pacific hotel investment volume totaled US$1.05 billion across 30 transactions, plunging to an all- time quarterly low since Q4 2012 and reflecting a 77% YoY decline in terms of volume.
- This quarter, investment activity was entirely carried by the big five markets: Japan, South Korea, China, Australia and Hong Kong, with zero transactions recorded in Southeast Asia.
- Even with a significant YoY drop of 64% in hotel investment volume, Japan still lead the market with US$564.8 million across eight transactions.
- South Korea reported a total transactional volume of US$241.1 million across 13 transactions, up 26% YoY due to the lack of high-profile deals in the same quarter last year.
- Despite being one of the first countries to come out of lockdown and having started to see some improvement in hotel occupancy, China hotel investment market remained lukewarm, reporting only two transactions with a total value of US$108.1 million, down 70% YoY.
Hotel investment across APAC is likely to remain tepid in 2020 as buyers continue to navigate very carefully through the changing investment environment. Whilst markets underpinned by strong fundamentals will continue to be sought- after, the alternative route to success will involve careful asset selection, diversification and the ability to assess and price in long-term risk
Savills Research