The re-emergence of South East Asian hotel investors in Australia is set to gain pace during 2008, as well as the emergence of the oil nations.
Jones Lang LaSalle Hotels, in its 2008 edition of Hotel Investment Outlook
, reports that foreign investors are showing heightened interest in hotel development and acquisition opportunities in Australia, most notably at the high-end.
"In Asia, business is booming and sentiment is strong, leading investors offshore; many of whom have an affiliation with Australia," said Mr David Gibson, CEO Asia Pacific, Jones Lang LaSalle Hotels.
Asian buyers have returned to Australian shores, accounting for 35% of total hotel transaction activity during 2007 – a significant increase on the 4% recorded during 2006.
"This renewed offshore interest has largely been driven by the increased availability of high quality assets being formally marketed for sale and the emergence of Asian REITs such as Ascott Residence Trust who in recent weeks acquired The Chifley on the Terrace Perth and the Devine Group's hotel site in Melbourne," said Mr Mark Durran, Executive Vice President – Investment Sales, Jones Lang LaSalle Hotels.
The Australian hotel investment market is expected to perform strongly in 2008. "Much of the forecast supply is yet to come on line and with markets continuing to exhibit strong demand fundamentals, hotel owners will benefit from continuing high returns," said Mr Gibson.
"In Australia, Sydney, Brisbane and Perth remain the most highly sought after markets," said Mr Durran. Adelaide is also a market to watch as performance improves on the back of the resources boom and infrastructure development.
In 2008, higher interest rates are not expected to adversely impact the market given the weight of capital seeking deals and continued income growth," said Mr Durran.
"Given the positive conditions for hotel trading we expect $1.2 billion worth of hotels to be transacted during 2008," said Mr Gibson.
Hotel transaction activity in Australia reached A$1.63 billion during 2007 (37 major transactions with a value above $5 million), surpassing the 2006 total of A$1.22 billion and the previous high of A$1.59 billion recorded during 2004. Australia Transaction Volume by Buyer Origin: 2000 to 2008F
Source: Jones Lang LaSalle Hotels