The first half of 2010 has seen a solid recovery in global hotel investment volumes. As of 15 June 2010, volumes have totalled US$4.5 billion – a 26% increase over the same period in 2009.
Fuelled by increasing investor confidence in the recovery of the lodging sector and substantial weight of capital in the marketplace, recovery in transactional activity has been greatest in the Americas. Hotel sales in the region have increased 97% annually to total US$1.9 billion, of which almost 95% were undertaken in the United States.
This marks the first time since 4Q 2007 that transaction volumes in the Americas have surpassed those of EMEA, which registered US$1.6 billion of sales in the same period (+14%). Leased assets have dominated sale activity in EMEA, accounting for almost US$500 million of hotel sales in the region. Although Asia Pacific volumes were down 19% compared to the same period in 2009, hotel sales at US$973 million continued to be brisk in the region, particularly in Japan and Australia.
While there are lingering concerns over the continued pace of recovery in the world economy, particularly in Europe, the outlook for the hotel real estate market continues to be buoyant. In the May 2010 edition of the Hotel Investor Sentiment Survey (HISS) produced by Jones Lang LaSalle Hotels, expectations for global short-term trading have recorded their most marked increase since the survey’s inception (up 31.8%).
Yield requirements have firmed up over the past six months, with capitalisation rates (initial yield) falling 100 bps to 8.7% and leveraged IRRs falling 120 bps to 18.1%. Market optimism is also reflected in changes in global investment intentions with a notable increase in ‘buy’ sentiment (+5.6% to 41.2%) and a concurrent decrease in ‘hold’ sentiment (-6.1% to 35.8%).
All things considered, transaction activity is on pace to total US$11-13 billion globally by year-end 2010, in line with the forecast levels that the firm projected at the beginning of the year.
|
