Regional performance has been tepid due to the absence of big players, but some markets are showing signs of improvement.
Cautious sentiment remains across APAC
- Contrary to industry beliefs, the region showed faint signs of a recovery during Q4/2020. The consensus of keeping travel bans and closed borders in place is shared by governments around the world. A few have engaged in bilateral travel green lanes but only very cautiously, with infections still rising daily and signs of mutant virus strains emerging. With the future of hospitality still in question, hotel transaction activity continues to be impaired.
- In Q4/2020, the APAC hotel investment market volume stood at US$976 million across 30 transactions, a decline of 81% compared with Q4/2019. The top three performing markets this quarter were India, Australia, and South Korea. These three represented 65% of the transactional dollar proportion.
- India led the region with only one high-profile hotel transaction valued at US$282 million, a 44% fall year-on-year (YoY).
- Besides Malaysia, Australia was the only other market in the region which saw a growth in hotel investment in the quarter under review. Australia reported five transactions with total volume of US$219 million, a 27% YoY increase.
- South Korea remained in the top three markets with a transaction volume valued at US$117 million across 12 deals, a 77% YoY fall from Q4/2019.
In the absence of high-profile cross-border deals on top of lingering global economic uncertainties, the hotel investment market is facing many challenges. 2021 should see some increase in deal momentum, in view of the news of effective COVID-19 vaccines and regional travel bubbles. Although the bid-ask gap remains, distressed assets are highly sought-after.
Savills Research