Based on a research report by JLL, Asia Pacific (Apac) hotel investment volumes fell by 51% y-o-y in 1H2023, weighed down by macroeconomic challenges and the rising cost of debt.

“Coming off a high base in 2022 and despite supportive market fundamentals, hotel investments moderated to US$3.13 billion ($4.14 billion) in 1H2023 versus US$6.41 billion during the same period last year,” the report indicates.

In Singapore, hotel transaction volumes totalled US$30 million in 1H2023, a 95% y-o-y plunge. The sale of Parkroyal on Kitchener Road for US$388 million, announced by UOL earlier this month, is expected to bolster the segment in the year's second half. The hotel, located in Little India, was purchased by Midtown Properties, a unit of the Worldwide Hotels Group. JLL advised on the sale.

In the rest of Apac, China also saw a drop in hotel investment activity, by 76% y-o-y to US$300 million. In contrast, Japan sustained robust hotel investments, growing 56% y-o-y to US$1.54 billion. Similarly, hotel investments in Australia and New Zealand rose, with volumes surging 189% y-o-y to US$820 million.

“We have observed the impact of a continued disconnect between the robust tourism demand and macroeconomic and geopolitical challenges in the first half of 2023, resulting in a gap between sellers’ pricing expectations and buyers’ access to capital,” says Nihat Ercan, CEO, Asia Pacific, JLL Hotels & Hospitality Group.

Given these headwinds, JLL has revised its full-year 2023 forecast for Apac hotel investments to US$8.7 billion, down 24% from its initial 2023 estimate.

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