Singapore hotel investment market to slow to a trickle in 2016, say analysts

Limited prospects are pushing investors to secondary markets.

Despite investors’ continued interest in the local hotel investment market, transaction activity in Singapore as well as Hong Kong will be sluggish in 2016, according to a report by JLL Hotels & Hospitality Group.

“Investors will continue to look at these established financial centres. However, lack of available assets in Hong Kong—which saw its highest number of transactions ever in 2015—will make it competitive. Similarly the tightly-held hotel stock in Singapore will mean any opportunities will be highly sought-after,” stated the report.

Meanwhile, the scarcity of prospects will have investors flocking to pockets of liquidity across Southeast Asia and the Indian Ocean. Interesting investment opportunities will probably pop up in markets such as Thailand, the Maldives, and Mauritius.

China and Japan will also continue to bask in investor attention in 2016. China will see sustained and likely increased hotel trades as big-ticket acquisitions attract even more interest, and Japan will also probably register high deal volumes that comprise domestic REITs coupled with interest from US Private Equity funds and Southeast Asian families. Japan will also be flush with demand from Chinese investors looking to purchase hotels in second tier Japanese markets.

Meanwhile, Australia will keep attracting strong investors interest. The widely expected scarcity of available stock will likely result in increased competition for the opportunity to enter the the Sydney and Melbourne market in particular.

Moreover, hotel REITs in Asia will also be on the rise if tax structures change to offer similar benefits to those seen in the US.