Gateway cities provide positive long-term tourism fundamentals, but investors are considering alternative investment in key emerging tourism markets, according to real estate consultancy JLL.

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Vietnam, 4 July 2017 – Hotel investors remain focused on gateway cities such as Hong Kong, Singapore, Sydney and Melbourne, as they offer positive tourism and trading fundamentals while the long-term demand and supply is in balance. Investors also continue to seek opportunistic investments in key emerging tourism markets such as Vietnam.

Asia Pacific hotel investment volumes in the first half of 2017 were just over US$2.9 billion, with a shortage of investment grade hotels on the market compared to the previous few years. JLL recorded 28 hotel deals across six countries that amounted to over 5,000 keys, with the average price per key of all transactions recorded at US$486,600.

Airbnb and other alternative accommodation operators have disrupted hotel performance in many larger cities. A legislative bill passed by the National Diet of Japan in June 2017 now outlaws illegal operators from 2018 in Japan.

For the first time since 2013, no Japanese transactions made it into the Top 10 single-asset transactions list with limited big ticket deals recently on the market.  On the other hand, portfolio transactions in Japan remain eagerly contested and the country’s long-term tourism outlook remains positive with the upcoming Summer Olympics in 2020.

“Hong Kong and Australia have been the standout markets in the region in terms of inbound investment, amounting to just under US$1.5 billion altogether, driven by robust tourism growth and solid trading performance driving investment activity in Australia,” says Frank Sorgiovanni, Head of Research, Asia Pacific at JLL Hotels & Hospitality Group.

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