VIC MARKET OVERVIEW
VICTORIA
Peter Harper - Managing Director – Head of Investment Sales Australasia JLL Hotels & Hospitality Group
Whether it’s global institutions, private domestic groups or other capital players, I’d be interested to get a sense as to what makes the hotel & hospitality sector an attractive investment class. Global allocations to the hotel & hospitality sector have definitely picked up, showing its resiliency as an asset class and attractive investment destination. JLL Research shows that hotel transaction volumes are up 21% (H1 2023 vs H1 2024) on a global basis, and up 90% within the APAC region. The ability for going-concern assets to immediately capture upside and growth in markets has definitely been acknowledged. Especially in challenging markets and recessionary environments, hotels can be seen as a hedge against inflation. Other hotel & hospitality attributes that appeal to investors include income diversification, yield, potential, value-add opportunities and a unique risk and return profile. Additionally, the performance of a lot of hotels over recent years means many could be genuinely considered as core plus style investments. And then with respect to the international capital piece, I understand that historically, Singapore, Japan, Hong Kong, and the US have been the most active buyer groups investing into the hotel & hospitality sectors in Australia - walk us through if you could how you’re observing interest from global players. Cross border investment remains very prominent globally, especially a lot of capital looking at Europe. We haven’t seen the same sort of levels of offshore investment here in Australia this year, however the interest is definitely still there and quite abundant, just patient and holding firm for trophy, strategic, or well-priced opportunities. Global groups are also looking outwards at other markets where there is better perceived value in the current environment. To date this year, offshore capital has accounted for 31% of national transaction volumes, which remains down on long-term averages. Utilising your expertise, what are the key considerations new market entrants need to make prior to deploying capital into leisure assets. Understanding that, unlike the core asset classes hotel investments are going concern by nature, thus carrying a far more dynamic income profile, with greater requirements for asset and investment management.
54 – October / November 2024
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