Hotel transaction activity remains muted as investors wait for the market to bottom out.
Q3 hotel investment under continuing pressure
- In Q3/2020, the APAC hotel investment market volume stood at US$1.7 billion across 28 transactions, showing a decline of 54% compared with Q3/2019.
- The top three markets in APAC, attributing to a majority of the transactions were Taiwan, Singapore and South Korea, with transactions in Taiwan and Singapore accounting for nearly 80% of the total in terms of value.
- Although Taiwan only recorded two transactions in the third quarter, the transactional volume stood at US$916 million, with the biggest transaction the sale of the Sunworld Dynasty Hotel in Taipei, also representing the largest hotel transaction in APAC this year.
- Singapore saw a 35% quarter-on-quarter (QoQ) increase in transaction volume, totaling US$388.5 million across two transactions, with City Developments Limited and CapitaLand the buyers.
- Despite seeing a fall of 83% QoQ in transactional volume, recording ten transactions, South Korea kept its position as the third most active market in the region.
Investor sentiment is starting to recover, albeit there is still a noticeable gap in pricing expectations between buyers and sellers. However, as hotels continue to experience downward pressure on their gross operating profit margins, we expect investment activity in the region to increase to year end.
Savills Research