Hotel investments in Asia likely to drop to US$3b in 2008

Asia is likely to register a sharp slowdown in hotel investments across the region this year, according to Jones Lang LaSalle Hotels.

The hotel investment advisory company said hotel sales in Asia may drop by as much as 75 per cent, compared to last year.

Some US$11 billion worth of deals were transacted across Asia in the hotel investment market last year. But Jones Lang LaSalle has forecast that hotel transactions in the region are likely to drop to as low as US$3 billion this year.

Mike Batchelor, managing director, Investment Sales Asia, Jones Lang LaSalle Hotels, said: “The greatest challenge at the moment is the lack of opportunities. The trading environment is strong, therefore there is a reluctance to really sell assets. We are in a low-interest rate environment, unlike our colleagues in other parts of the world.”

Despite this, Jones Lang LaSalle Hotels is optimistic that activity will pick up in 2009. It has forecast that the number of hotel rooms in Asia will surge by 25.8 per cent, with 140,000 new rooms to be added around the region over the next three years.

It added that the increases will be most pronounced in India, but growth has been hampered by rising land prices.

Corinna Toh, SVP, Corporate Advisory Services, Jones Lang LaSalle Hotels, said: “We’ve come across hotel projects that have been earmarked, but due to the rapid rise in land prices there, people may not want to build hotels, they may want to do something else, like residential apartments.”

Only US$1 billion of hotel investment transactions in Asia were recorded in the first quarter of this year.

Source : Channel NewsAsia – 22 Jul 2008

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