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Sydney, 21 May 2013 - The Australian hotel investment market has had a stellar start to the year with year-to-date transaction volumes totalling AUD270 million, 84.9% up on the same time last year. Eleven accommodation assets have already exchanged, with a further AUD800 million of hotels and development sales (completed value) currently in due diligence.
Jones Lang LaSalle’s Hotels & Hospitality Group estimates that transaction volumes (including development sales) look set to surpass the 2007 record high, with full year sales predicted to reach AUD1.9 billion.
Craig Collins, Chief Executive Officer - Australasia, Hotels & Hospitality Group, said “Since 2009 we have witnessed near record levels of transaction volume each year. These strong levels of activity continue to be driven by positive trading market fundamentals, a number of emerging inbound tourism markets, higher returns when compared to other markets across the Asia Pacific region, a positive economic outlook and overall transparency.”
Mr Collins continued, “These factors are attracting the many international hospitality REIT’s and investment funds that are currently active in the market, while owner-operators have also moved on the few vacant possession opportunities that have arisen given the expected scarcity of such offerings progressing forward.”Contrary to the past four years, domestic private investors have dominated acquisitions so far in 2013 accounting for around 50% of the total volume. However, this is expected to reverse in the latter half of the year as a number of major assets are sold and South East Asian investors continue to make their mark on the Australian hotel investment landscape, while Chinese, Korean and UAE investors become increasingly active.
Mr Collins noted “The surge of activity amongst domestic investors is a result of their dominance in the sub AUD40 million space with a number of assets in this category already transacting this year. This includes the Ibis King Street Wharf Sydney and Diamant Hotel Sydney. Chinese investors are however coming to prominence in this sector of the market as they look to capitalise on the strong growth of Chinese inbound demand and acquire assets that are best placed to capture this market segment. The recent sale of the Esplanade River Suites in Perth to the Narada Hotel Group is a perfect example.”
Sydney has retained its’ mantle as hotel investment hot spot accounting for almost 50% of the total transaction volume so far in 2013 and with expectations of more sales to come in the remainder of the year. Transaction activity is however expected to be buoyant across all the major Australian markets by year end.
Assets currently on the market include Quest Sydney Olympic Park, Mercure Hadley’s Hobart and Grand Mercure Hobart Central Apartments.
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