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News Release

Singapore

Global Hotel Investment Levels up 52% Year-on-Year in Q1 2010

Asia Pacific region grows 43% y-o-y


16 April 2010 – The global hotel investment market experienced a strong start to the year with first quarter transaction volumes reaching $2.8 billion, a 53% increase on the $1.8 billion transacted in Q1 2009. Europe, Middle East and Africa (EMEA) remained the most active region recording $1.1 billion of hotel sales, a 46% year-on-year (y-o-y) increase for the same period, while the Americas and Asia Pacific regions recorded Q1 sales worth $991 million (+70% y-o-y) and $736 million (+43% y-o-y) respectively.
 
Of the $736 million recorded for Asia Pacific, the volume was equally divided between Asia and Australia.  In Asia, Japan monopolized the $362 million of sales generated by five transactions – an increase of 38.1% compared to 2009.   While a positive start for the region as a whole, the Q1 transaction volume for Asia recorded a decline of 23.6% compared to the volume of transactions during Q1 2009 when volumes were boosted by transactions in China and India. 
Scott Hetherington, Jones Lang LaSalle Hotel’s Managing Director, Asia said: “Investor sentiment for hotel real estate assets has improved considerably, resulting in an increase in transaction activity since the start of the year. As the global credit markets have begun to ease there is a greater weight of capital targeting the market for acquisition opportunities.  We have also witnessed a noticeable increase in stock being offered to the market with increased sale activity from banks and other lenders who have taken control of more assets over the last year in an attempt to reduce their hotel loan portfolios.”

Commenting on the Asia Pacific region, Jones Lang LaSalle Hotels’ Managing Director for Investments Asia, Mr. Mike Batchelor said, “Asia-based conglomerates and high net worth investors continue to dominate activity in Asia-Pacific, accounting for almost half of all transactions undertaken during Q1 2010. Investor interest is very strong in Australia and Japan within the region.”  

Of the five transactions that occurred in Japan during Q1, only one was a domestic purchaser while the remaining four transactions were cross border acquisitions by Asian investors.  Mr. Batchelor added, “I expect interest from Asian investors to continue as we start to see confidence and optimism return to the market as well as an increase in opportunities being marketed.”

Mr. Hetherington concluded, “The global hotel investment market during 2009 was plagued by a deficient debt market and a lack of quality stock, but the start of 2010 is already showing healthy signs for transactional activity, which should set the tone for the remainder of the year.  While buyers and lenders remain cautious, funding is increasingly available for the right deals.  Coveted prime assets in key gateway cities are also becoming available driven partly by the sale of individual hotels, but also a better balance between buyer and vendor expectations on pricing.”

Maintaining the trend from 2009 institutional investors have remained the most prolific investors across EMEA, seeking assets in secure Western European markets with stable incomes, and were responsible for more than a third of buying activity in the region.

In the Americas investor interest remains strong from domestic buyers but also international groups, who accounted for 34% of all transaction during Q1 2010. With the recovery in public markets, US-based REITS are also becoming increasingly acquisitive and purchased more than $441 million worth of hotels during the first three months of the year.