Hotel Sales & Investment · 2019. 6. 5. · billion, including the US$2.9 billion Wanda portfolio...
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1 savills.com.sg/research MARKET IN MINUTES Savills Research Hotel Sales & Investment APAC hotel investment volume down in 2018 An absence of large portfolio deals in China was a drag on overall Asia-Pacific hotel investment volumes in 2018, despite robust investment activity in the key regional markets. Savills plc Savills is a leading global real estate service provider listed on the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled growth. It is a company that leads rather than follows, and now has over 600 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East. This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research. “Our outlook for 2019 is positive as we continue to see strong bidding from existing players as well as new entrants, especially for larger- sized hotel assets in prime locations in both developed and emerging markets.” SAVILLS RESEARCH Greg Condon Director, Valuation & Advisory Head of Hotel Valuation, South East Asia +66 2636 0300 [email protected] VALUATION • Total Asia-Pacific hotel investment volume in 2018 was stood at US$7.7 billion across 227 tracked transactions, down 39.4% compared with 2017. Major investment markets such as Australia, South Korea, Japan and Singapore saw robust activity, however, volume in China was down significantly, affecting the overall figure for the region. Total investment volume in Q4/2018 was US$1.8 billion, down 5.7% compared with the same quarter in 2017. • Total investment volume in the final quarter of 2018 in Australia amounted to US$536.8 million with ten tracked transactions, accounting for 30.0% of Q4 transaction activity in the region. • The South Korean market maintained a solid pace of investment activity throughout the year, and the final quarter of the year was no different, with 17 tracked transactions worth a total of US$310.5 million. • In Japan, although investment volume was significantly down in 2018 compared with 2017, there was still a fair amount of investment activity in the final quarter, with 12 tracked transactions worth US$292.9 million. Asia Pacific – March 2019 Julien Naouri Director, Asia Pacific +65 6415 7583 [email protected] Simon Smith Senior Director Asia Pacific +852 2842 4573 [email protected] RESEARCH Raymond Clement Managing Director Asia Pacific +65 6415 7570 [email protected] HOTELS Please contact us for further information Savills team Nathalia J Wilson Senior Director Asia Pacific +65 6415 7589 [email protected] Michael Simpson Managing Director Australia & New Zealand +61 2 8215 8831 [email protected] Annie Wang Director, China +86 10 5925 2029 [email protected] Tomotsugu Ichikawa Director, Japan +81 3 6777 5184 [email protected] • In Singapore, there were two tracked transactions in the final quarter of 2018, worth U$279.0 million and accounting for 15.6% of investment volume. A Government Land Sale tender of a 99-year leasehold hotel site drew headlines in early 2019 with a winning bid of S$562.2 million, or S$2,148.50 psf per plot ratio.
Transcript of Hotel Sales & Investment · 2019. 6. 5. · billion, including the US$2.9 billion Wanda portfolio...
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MARKETIN
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Savills Research
Hotel Sales & Investment
APAC hotel investment volume down in 2018An absence of large portfolio deals in China was a drag on overall Asia-Pacifi c hotel investment volumes in 2018, despite robust investment activity in the key regional markets.
Savills plcSavills is a leading global real estate service provider listed on the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled growth. It is a company that leads rather than follows, and now has over 600 offi ces and associates throughout the Americas, Europe, Asia Pacifi c, Africa and the Middle East. This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. Whilst every eff ort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.
“ Our outlook for 2019 is positive as we continue to see strong bidding from existing players as well as new entrants, especially for larger-sized hotel assets in prime locations in both developed and emerging markets.” SAVILLS RESEARCH
Greg CondonDirector, Valuation & AdvisoryHead of Hotel Valuation, South East Asia +66 2636 [email protected]
VALUATION
• Total Asia-Pacifi c hotel investment volume in 2018 was stood at US$7.7 billion across 227 tracked transactions, down 39.4% compared with 2017. Major investment markets such as Australia, South Korea, Japan and Singapore saw robust activity, however, volume in China was down signifi cantly, aff ecting the overall fi gure for the region. Total investment volume in Q4/2018 was US$1.8 billion, down 5.7% compared with the same quarter in 2017.
• Total investment volume in the fi nal quarter of 2018 in Australia amounted to US$536.8 million with ten tracked transactions, accounting for 30.0% of Q4 transaction activity in the region.
• The South Korean market maintained a solid pace of investment activity throughout the year, and the fi nal quarter of the year was no diff erent, with 17 tracked transactions worth a total of US$310.5 million.
• In Japan, although investment volume was signifi cantly down in 2018 compared with 2017, there was still a fair amount of investment activity in the fi nal quarter, with 12 tracked transactions worth US$292.9 million.
Asia Pacifi c – March 2019
Julien NaouriDirector, Asia Pacifi c+65 6415 [email protected]
Simon SmithSenior DirectorAsia Pacifi c+852 2842 [email protected]
RESEARCH
Raymond ClementManaging DirectorAsia Pacifi c+65 6415 [email protected]
HOTELS
Please contact us for further information
Savills team
Nathalia J WilsonSenior DirectorAsia Pacifi c+65 6415 [email protected]
Michael SimpsonManaging DirectorAustralia & New Zealand+61 2 8215 [email protected]
Annie WangDirector, China+86 10 5925 [email protected]
Tomotsugu IchikawaDirector, Japan+81 3 6777 [email protected]
• In Singapore, there were two tracked transactions in the fi nal quarter of 2018, worth U$279.0 million and accounting for 15.6% of investment volume. A Government Land Sale tender of a 99-year leasehold hotel site drew headlines in early 2019 with a winning bid of S$562.2 million, or S$2,148.50 psf per plot ratio.
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NORTHERN ASIA1 The South Korean market maintained a solid pace of investment activity throughout the year, and the fi nal quarter of the year was no diff erent, with 17 tracked transactions worth US$310.5 million. To put the pace of investment activity into perspective, consider that in 2017 there were 12 tracked transactions worth a total of US$486.9 million in South Korea, compared with 57 transactions in 2018 worth a total of US$1.7 billion. The great majority of buyers were local investors, however, a handful of deals were also done by investors from Singapore, Japan and China. The Korean hotel market is expected to remain very active in 2019 with more foreign investors, including institutional investors, likely to enter the fray instead of just observing from the sidelines.
Among the notable deals during the quarter were two by Singaporean buyers. Ascendas Hospitality Trust purchased its second hotel in Seoul, the Ibis Ambassador Seoul Insadong hotel, for KRW77.5 billion (approximately US$69.2 million or US$191,000 per key) from a local fund managed by Seoul-based Richmond Asset Management. The fi ve-year old property has 363 rooms and was reported to have traded at a pro forma net property income yield of 4.6%.
Singapore-listed Datapulse Technology entered into an agreement to purchase Hotel Aropa, also in Seoul, for KRW35 billion (approximately US$31.3 million or US$246,000 per key), subject to shareholder approval.
In Japan, although investment volume was signifi cantly down in 2018 compared with 2017 (US$2.4 billion in 2017 versus US$1.4 billion in 2018) there was still a fair amount of investment activity in the fi nal quarter with 12 tracked transactions worth US$292.9 million.
Mirai REIT of Japan announced the acquisition of a portfolio of four hotels in various locations across Japan with a total of 582 rooms for JPY12.5 billion (approximately US$114.1 million or US$190,000 per key).
GREATER CHINAThere was a notable fall in transaction activity in both China and Hong Kong in 2018 with no large portfolios being transacted, as had been expected. In 2017, transactions in China were worth US$4.7 billion, including the US$2.9 billion Wanda portfolio transaction, compared with only 13 tracked transactions in 2018 worth US$974.1 million. Activity virtually dried up in Q4/2018 in China with only two small transactions concluded, reportedly worth US$32.7 million.
Hong Kong followed a similar pattern, with
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transaction activity in 2018 amounting to US$925.7 million, down 43.3% compared with 2017. One notable transaction reported in Q4 was by an entity controlled by Tang Shing-bor, which purchased the 199-room Inn Hotel Hong Kong from Emperor International for a reported HK$1.1 billion (approximately US$140.2 million or US$704,000 per key).
It seems unlikely that we will see a broad-based pickup in hotel investment activity in China anytime soon, however, there is always the off -chance that a very large portfolio may change hands as some of the big conglomerates continue to undergo restructuring.
SOUTHEAST ASIA AND SOUTH ASIAThe Southeast Asia region had a busy quarter with the LVMH acquisition of the Belmond Hotel Group involving several properties in the region in addition to the strong activity seen in Singapore.
In a blockbuster deal announced late in 2018, LVMH agreed to acquire the Belmond Hotel Group in a US$3.2 billion transaction that will see it take over a worldwide portfolio of more than 30 luxury hotels that the group either owns, partly owns or manages, along with other businesses, in a big bet on the future growth of the experiential luxury sector. The portfolio includes properties in Cambodia (Siem Reap), Indonesia (Bali), Laos (Luang Prabang) and Myanmar (Yangon).
In Singapore, there were two tracked transactions in the fi nal quarter of 2018, worth U$279.0 million and accounting for 15.6% of investment volume. Darby Park Executive Suites, a 75-unit serviced residence on Orange Grove Road, was sold by Sime Darby Property to Royal Group for S$92.7 million. It is understood that the new owner plans to redevelop the property into a hotel.
Also grabbing headlines in Singapore in early 2019 was the Government Land Sale tender of a 99-year leasehold hotel site in Club Street that drew eight bids. The winning bid was submitted by Worldwide Hotel Group’s Midtown Development at S$562.2 million, or S$2,148.50 psf per plot ratio.
In January 2019, Oxley Holdings was reported to have accepted a non-binding LOI for the sale of its Novotel Singapore on Stevens and the Mercure Singapore on Stevens, both located close to Orchard Road, for a combined S$950 million. The pair of hotels have 772 keys in total and the proposed transaction, should the parties proceed to enter into a defi nitive sale and purchase agreement, would translate to S$1.23 million per key.
There were two reported deals in Vietnam in the last quarter of 2018. One was Berjaya Land Bhd selling its 75% stake in the InterContinental Hanoi West Lake Hotel for
GRAPH 1: Investment Sales Transaction Values, 2013 to 2018
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US
$ b
illionU
S$
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Quarterly total Rolling 4-Quarter total (RHS)
Source Savills Research & Consultancy, RCA
GRAPH 2: Investment Sales Transaction Volumes By Location, Q4/2018
Australia30.0%
South Korea17.4%
Japan16.4%
Singapore15.6%
Hong Kong SAR7.9%
New Zealand4.0%
Vietnam4.0%
India2.9%
China1.8%
Source Savills Research & Consultancy, RCA
GRAPH 3: Investment Sales Transaction Volumes By Buyer Origin, Q4/2018
Singapore28.9%
Japan14.5%
France14.1%
South Korea11.7%
Hong Kong8.4%
USA7.6%
Unknown4.5%
Vietnam4.0%
Malaysia2.4%
China1.8%
Dubai1.0%
Australia0.6%
New Zealand0.4%
Source Savills Research & Consultancy, RCA
Hotel Sales & Investment
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VND1.24 trillion (total value of approximately US$71.2 million or US$224,000 per key).
AUSTRALIA AND NEW ZEALANDTransaction activity in Australia in Q4/2018 was bolstered by AXA’s purchase of a portfolio of four Accor hotels from the Abu Dhabi Investment Authority, in the biggest hotel deal of the year in Australia. The four hotels have a combined 831 rooms and are managed by Accor under long-term management agreements. Three of the hotels are inside Sydney Olympic Park, while the fourth is the 286-room Novotel Canberra. The portfolio was reported to have sold for AU$330.4 million (approximately US$241.4 million).
Total investment volume in the fi nal quarter of 2018 in Australia amounted to US$536.8 million with ten tracked transactions, accounting for 30.0% of Q4 transaction activity in the region.
In New Zealand, investment activity in the quarter amounted to US$71.7 million across nine tracked transactions. The largest transaction by far was the sale of the Waldorf Stadium Apartment Hotel in Auckland to the Mulpha Group. The transaction price was not disclosed, however, it is reported to have
sold for between NZ$60 million–NZ$70 million (US$41.3 million–US$48.2 million). The hotel will continue to be run by the Waldorf brand, owned by Japanese conglomerate Daiwa House Group.
OUTLOOKIn 2018, the global economy saw the sudden emergence of greater downside risks to global growth. Escalating trade tensions and the weaker-than-expected performance of some key economies gave rise to a spike in the global economic risk profi le. This should temper appetite for hospitality assets in Asia-Pacifi c, especially in emerging markets. However, this has not been the case thus far. The diminished transaction volume in 2018 remains more a function of a lack of available investment grade stock than a lack of investor appetite.
Our outlook for 2019 is positive as we continue to see strong bidding from existing players as well as new entrants, especially for larger-sized hotel assets in prime locations in key markets both in developed and emerging countries. Furthermore, the recent deals that have taken place have been at very aggressive price points, indicating that there remains pent-up appetite for hotel assets in the region. Yields remain at historically low levels.
HOTEL LOCATIONAPPROXIMATE SALE PRICE
(US$ MIL)
APPROXIMATE PRICE PER
ROOM (US$)BUYER
Ibis Ambassador Seoul Insadong Seoul 69.2 190,747 Ascendas Hospitality
Hotel Aropa Seoul 31.3 246,223 Datapulse Technology
Portfolio of four hotels in various locations Japan 114.1 196,063 Mirai REIT
Inn Hotel Hong Kong 140.2 704,400 Tang Shing-bor
InterContinental Hanoi Westlake Hanoi 71.2 223,797 Hanoi Hotel Tourism Development Company JSC
TABLE 1: Selected Investment Transactions, Q4/2018
Source Savills Research & Consultancy, RCANote KRW/USD = 1,119; JPY/USD = 109.5; HKD/USD = 7.85; VND/USD = 23,318; AUD/USD = 1.37
Hotel Sales & Investment
