Hotel investments in Asia Pacific are set to total $12.2 billion for the full year 2024 as a result of an influx of investment activity, a more favourable interest rate environment and supportive macro and microeconomic developments.

JLL reports that full year Asia Pacific hotel investment volumes in 2024 are anticipated to grow by 4.3% on 2023, which totalled $11.7 billion.  

In the first nine months of 2024, cumulative transaction volumes totalled $9.05 billion, tracking up 15% year-on-year ($7.87 billion in 2023), representing 90% of the volume of 2019.

Cross-border investment surged in YTD Sep 2024 driven by large transactions in Asia, with Japan leading, while Australia experienced a rare lull in annual activity.

“A combination of broader economic factors, including a positive macroeconomic outlook regionally, supportive interest rate policies and solid consumption factors give us confidence that full year hotel investment will comfortably eclipse last year,” said JLL Hotels and Hospitality Group, Asia Pacific CEO, Nihat Ercan.

“Investors have consistently shown an appetite to play larger in the hotel sector in Asia Pacific and we see no signs that activity will wane in the last quarter of 2024, making us increase our investment volume forecast to $12.2 billion.”

Average daily rates (ADRs) in Asia Pacific are up 19% in local currencies versus the last cyclical peak in 2018-2019, according to JLL with most markets still having room to increase occupancy back to pre-pandemic highs “given strong business travel offsetting some pull back in leisure travel”.

“Concurrently, JLL believes that the last leg of occupancy may take longer to come back with MICE still slower to return and Mainland China still facing lingering economic issues in the short-term influencing overall industry performance,” JLL said.

“JLL analysis suggests that Australian sales volumes will remain relatively subdued over 2024, suggest. Year-to-date volumes have totalled $629 million (settled), down 38% from the same period last year.

“JLL is estimating that total transaction volumes should reach approximately $1.1 billion for the full year, which is below the long-term average, but likely influenced by the fact that many 2024 transactions could also be classified as ‘last year’ deals.”

“In the first nine months of 2024, Japan further established itself as the most attractive hotel market regionally. Activity through the end of September resulted in sales volumes at $3.8 billion.

“Given that investor interest is unlikely to wane, JLL forecasts in total sales of $4.7 billion for 2024, followed by an increase of 4% in 2025 at $4.9 billion. Despite the recent interest rate hike and slight appreciation of the yen, JLL anticipates Japan hospitality investment to remain active given the strong underlying supply and demand fundamentals.

“Investment in Mainland China’s hotel space totalled $1.8 billion as of end Sep 2024, reflecting a 6.4% growth from the previous year. Shanghai and Beijing remained the most actively traded hotel investment markets accounting for over 50% of total transaction volumes.”

Ercan said: “Factors including the fluctuating currency exchange against the dollar has helped attract foreign investors since H1 2023.

“The welcome surge in strong tourism fundamentals in the region since the reopening of borders to international travel has also helped bolster investor appetite.

“Although there are some markets that may see some short-to-medium term easing of occupancy, the overall industry has entered a new phase less defined by recovery and more linked to ideas of organic and sustainable growth.”