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Investment in Asia Hotels Leaps as Many Covid Curbs Ease

CBRE said a range of investors, from real estate investment trusts to private offices, and a growing volume of private equity funds, are acquiring hotels


Hong Kong's Butterfly on Prat hotel is among those purchased by foreign investors. Photo: Hines Fund

 

Asia-Pacific hotel investment grew 46% year-on-year in 2021 to reach $12.1 billion, buoyed by a steady reopening of borders and easing travel restrictions outside China, data show.

Real estate group CBRE said a range of investors, from real estate investment trusts to private offices, and a growing volume of private equity funds, are acquiring hotels in anticipation of pent-up tourist demand.

Some buyers are converting hotel assets into offices and co-living spaces.

“Hotels are among the sectors poised to benefit as the region’s borders reopen,” Steve Carroll, head of hotels and hospitality at CBRE Asia Pacific, said.

“The sector offers attractive risk-adjusted yields and asset repositioning opportunities.”

Foreign Investment Rises

Foreign investors are also active, Carroll said, especially in Hong Kong, which has endured two years of lockdowns and tough border requirements due to Covid-19. 

“In the past six months, foreign funds have acquired Butterfly on Prat, Hotel sáv Hong Kong and Travelodge Central Hollywood Road, with plans to incorporate co-living or student accommodation elements in the redevelopment,” Carroll said, referring to three midrange properties.

Mainland tourists have been the main source of tourism in Hong Kong, accounting for nearly 80% of visitors in 2019. Currently, travel across the Hong Kong-China border remains limited

Despite continuing curbs in Hong Kong, the hotel industry has not seen any significant distressed assets.

CBRE found that the number of investors expecting a discount on hotel assets dropped from 99% in 2021 to 78% this year, suggesting an improvement in asset price.

 

  • George Russell

 

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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