Real estate big hitter Jones Lang LaSalle has predicted that global hotel investment will total $32 billion this year. The firm believes that more transparency will make it easier for cross-border investors in the sector. In the initial release of its annual Hotel Investment Outlook report, to be fully released in late January, the firm predicts solid demand for acquisitions from a wide range of buyer groups. It also said that cross-border capital, which accounted for 30 percent of global hotel investment last year, could also accelerate this year.
Other main predictions of the report included:
- Global debt availability is expected to be at its highest level since 2007
- Private equity and REITs will dominate purchasing activity with 60 percent of the global market
- The biggest sellers will be bank-induced refinancing challenges
"Inadvertent hotel owners, like banks and receivers, will continue to drive a significant share of hotel product to market. We also expect institutional investors to liquidate select non-core assets that will create opportunities for value-add investors," said Mark Wynne-Smith, Global CEO of Jones Lang LaSalle's Hotels & Hospitality Group. "While buyers have indicated a greater intent to purchase in 2013, the global economic uncertainty will keep a ceiling on transaction volumes."
Finally the report went on to highlight private equity funds and REITs as continuing to be major players behind global hotel demand, with the former utilising their significant buying power and risk tolerance to achieve opportunistic returns, and the latter continuing to make headline purchases of core properties in so-called gateway markets. It highlighted two new hotel REITs recently listed in Singapore thought to be heavily active in North America and Asia in the year ahead. Funds from the Middle East will continue to scour the globe for trophy assets looking for opportunities to export capital in 2013, said the report.
"Hotel investment strategies moving forward will be more structural and strategic than cyclical, impacting what we've always deemed as the 'typical' ebb and flow of the transaction market," concluded David Green-Morgan, Global Capital Markets Research Director for Jones Lang LaSalle. "Flexible investors and operators who can calculate risk and adapt the quickest will be the most successful next year.
- Wednesday 16 January 2013