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Light at the End of the Tunnel: Asian Hospitality Investment Market Update

The recent announcement of a novel coronavirus vaccine being approved for a wide distribution program in the UK has brought tears of joy to many people, and hospitality and travel professionals are not an exception. Should this practice continue and populations in other nations get vaccinated, the humanity may stand a very real chance of returning to some form of a more connected and mobile world. In fact, so much so that Govinda Singh, Executive Director, Head of Hotels & Leisure, Asia at Colliers International speaks optimistically about the possibility of returning to at least 70% travel economy starting mid-2021. What does it mean for the hospitality sector investors?

One of the positive examples of efficient Covid-19 crisis management is Australia. Such competent conduct was rewarded with heightened interest from the investors, who appreciate both mid- and long-term opportunities, given the country’s sizeable domestic market and the availability of stock past the development phase. Another attractive feature is the relatively extensive government support for what once was the nation’s second-biggest export industry and generated above USD100 billion in spending yearly.

Another promising market is Maldives, where by the end of October, 94% of hotels have restarted welcoming guests. Given the country’s reputation as a luxurious destination, diversification of source markets and profile of tourism arrivals, as well as expansion of infrastructure, the investment demand is expected to remain strong, as potential owners search for higher yields against the backdrop of globally diminishing returns.

Generally speaking, markets receiving the biggest amount of attention are those with high-value quality assets and significant price adjustments, with South Korea, China and Taiwan leading the way, and Singapore, India and Japan performing rather poorly during Q3 2020. Looking forward, the investment demand is projected to develop healthily in the countries with large domestic bases, as those are more likely to recover first. As such, cautious optimism seems to be the way forward, and who knows - perhaps the vaccine news will become the much-needed light at the end of the 2020 tunnel.

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