According to JLL (NYSE: JLL), 2015 is on track to be a record year for foreign investment into hotels, as the company announces that global hotel transactions reached $42 bln (approx. €38.5 bln) in the first half of the year driven by a wealth of foreign investment.
The largest total deal volumes in the first half of the year were witnessed in the Americas at $24 bln (approx. €22 bln), up 73% y-o-y. This is followed by EMEA, up 55% to $15 bln (€13.75 bln), while the Asia Pacific region saw a slight decline in investment volumes, down 6% to $4 bln (approx. €3.7 bln).
While American private equity funds remain the largest source of capital flowing into hotels, H1 2015 saw a significant rise in transactions involving Mainland Chinese and Middle Eastern investors, who allocated $9.8 bln (approx. €9 bln) to global hotels real estate, up from $2.3 bln (approx. €2.1 bln) during the same period last year.
“One of the biggest trends of 2015 is the surge in Middle Eastern and Mainland Chinese investment into hotels globally. This is despite some underlying concerns across the globe, such as the Greek debt crisis and the recent fluctuations in the Chinese stock market.” Said Mark Wynne Smith, Global CEO JLL Hotels & Hospitality. “At the start of the year we predicted full year global hotel transaction volumes of $68 bln (approx. €62.4 bln). We’ve achieved 60% of this already in the first half of 2015 and, if momentum continues in the second half of the year, we could surpass our forecast.”
The Americas – foreign investment up 176% y-o-y
Total foreign investment into hotels in the Americas in H1 2015 hit $4.2 bln (approx. €3.85 bln), up 176% on the same period in 2014. Of this total, $4 bln (approx. €3.7 bln) came from Mainland Chinese and Middle Eastern investors, whose volumes demonstrated a staggering 308% uplift from H1 2014.
Key transactions in Q2 2015 include the Edition New York ($343 mln [approx. €314.5 mln] to ADIA) and the Baccarat Hotel & Residences NYC ($230 mln [approx. €210.9 mln] to Sunshine Insurance Group).
EMEA – most attractive place in the world for foreign investment
In terms of cross border hotel transactions, EMEA received the largest amount at $9 bln (approx. €8.25 bln) in H1.
“Portfolio sales are increasingly popular in EMEA and accounted for 65% of the total transaction volumes,” commented Wynne Smith. “This tells us that investors are looking for scale in what’s becoming a very competitive market.”
The largest portfolio deal in Q2 2015 was the sale of the Maybourne portfolio in London to a Middle Eastern investor for $2 bln (approx. €1.83 bln).
Asia Pacific – focus on single asset deals
Single asset transactions dominated the Asia Pacific market, accounting for 82% ($3 bln [approx. €2.75 bln]) of total deal volume. Sovereign Wealth Funds were the most active buyers in Q2 2015. The largest deal was the 50% sale to ADIA of three hotels in Hong Kong (Renaissance Harbour View, Hyatt Regency Tsim Sha Tsui and Grand Hyatt) worth around $1 bln (approx. €916.9 mln).
Source: JLL
