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No signs of abating for Asia Pacific’s hotel cap rate compression

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Hotel Investor Sentiment Survey | December 2014

What are the hot markets? Where are investors planning to develop or acquire? Find the answers in our latest Hotel Investor Sentiment Survey.

Browse global and regional snapshots on this site or get the full HISS report.​​

Asia Pacific Highlights

  • Investor sentiment for trading in Asia Pacific hotel markets has increased substantially compared to the April 2014 survey with short term expectations surging to 55.2% and medium term increasing to 60.9%.
  • Investor expectations for leveraged IRRs fell slightly, averaging 12.8%, with higher expectations for Australasian assets which increased to 12.0% from 10.8% (April 2014). This was offset by a slight reduction in expectations for Asia, reflecting the premium which is being channeled to the large volume of capital chasing hotel assets.
  • Asia Pacific cap rate expectations tightened further as outbound capital continues to chase hotels with new entrants attracted to the sector and few assets available for sale. Cap rate expectations tightened by a respectable 20 basis points to average 7.0%. This is now the lowest level ever recorded in our survey.
  • Divergent cap rates are expected over the next six months across Asia Pacific but further rate compression is forecast in Brisbane, Ho Chi Minh City, Jakarta, Kuala Lumpur, Manila, Osaka, Phuket, Singapore, Sydney and Tokyo.
  • A new ruling set by the Chinese Ministry of Commerce (MOC) came into effect on 6 October 2014. Under the previous rules, any overseas investment project worth more than USD100 million required MOC approval. This requirement has now been abolished and is set to further increase outbound investment for hotel assets abroad.​​
HISS

Asia Pacific Stage in the Investment Cycle^

Asia Pacific Leveraged IRR Requirements
2000 to 2014^

Asia Pacific Trading Performance Expectations
2000 to 2014^

Asia Pacific Cap Rate (Initial Yield) Requirements
2000 to 2014 ^

Asia Pacific Short Term Cap Rate Trend^

HISS December 2014 - Infographics