January
2011 - Jones Lang LaSalle Hotels announced today that $24.3
billion in hotel real estate traded hands globally in 2010 as investors
made their way back into the game following the gridlocked market and
economic fall-out of 2009, which marked the floor of the hotel
investment market. This is according to Jones Lang LaSalle Hotels’
Hotel Investment Outlook report, which premiers today at the Americas
Lodging Investment Summit in San Diego, California.
The Americas region registered the most
dramatic rise in 2010, with transaction volumes increasing five-fold to
$11.1 billion, driven by acquisitive REITs and the $3.9 billion
purchase of Extended Stay Hotels. Europe, Middle East and Africa (EMEA)
was the second most liquid region, experiencing a more than 110% jump
in volumes to $9.3 billion. Activity across Asia Pacific edged upwards
at a more moderated pace with total sales of $3.9 billion, reflecting
lower levels of leverage in the market and hence fewer distressed
sales, along with a slowdown in deal pace in Japan.
“The rebound of operating fundamentals is a
motivating tonic for both buyers and sellers, as is the broad cross
section of equity capital in the market,” said Arthur de Haast, global
CEO for Jones Lang LaSalle Hotels. “We expect volumes to rachet up
another 15-25% in 2011, reaching $28-30 billion globally.”
Hotel real estate sales in the Americas are
expected to total up to $13 billion in 2011, driven by the breadth of
equity, an increased number of bank-forced sales and easing levels of
leverage, with the bulk of activity taking place in the U.S. This will
represent an increase of 80% on 2010 levels when excluding the $3.9
billion Extended Stay Hotels transaction.
“Investor confidence is on a robust
rebound,” said Arthur Adler, CEO and Managing Director of Jones Lang
LaSalle Hotels. “Markets are expected to continue to recover through
2011 as the economic upturn solidifies. Dominant acquirers of hotel
assets in 2011 will be REITs, institutional investors, and private and
high net worth investors with opportunistic capital.”
In other parts of the world, the EMEA region
is projected to increase to $13.1 billion, with bank-driven sales
driving a significant portion of this figure, particularly in the U.K,
Ireland and Spain. Japan is forecast to lead the Asia Pacific sales,
slated to reach $3.5 billion in 2011, as banks take a view on
initiating structured sales.
As the economic rhetoric switched from
recession to recovery, cross-regional capital flows increased to 41% of
total transaction volume in 2010 compared to 15% in 2009 as
well-capitalized investors acquired assets in displaced markets across
the globe. Global capital was most active with a share of 53% of
cross-regional investments. Asian, Middle Eastern and U.S. investors
were keen to secure prime acquisition opportunities outside of their
region, particularly in Europe.
“There is no doubt that cross-border
investments will further increase in 2011. With more clarity on
operating fundamentals, continued breadth of equity capital in the
market, and generally reduced risk perceptions, investors will be more
open to opportunities beyond their home markets,” said de Haast.
“Fortune favors the bold. Early movers and risk takers will often be
rewarded, and the global mantra across all markets and segments in 2011
will be the focus on hotel fundamentals.”
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