JLLH: Investors’ appetite rises to 18-month high

Jones Lang LaSalle Hotels on Thursday said that a new hotel investor sentiment revealed an increased 38.6% of investors across the globe indicated a ‘buy’ strategy for the next six months.

The largest uptick in ‘buy’ sentiment was recorded in Asia Pacific, followed by the Europe, Middle East and Africa (EMEA) region. In the Americas, although investors’ ‘buy’ sentiment decreased slightly, it still remains at the highest point of the three regions. The firm’s proprietary survey is directed toward the world’s 6,000-plus leading hotel investors and owners.

In the short-term, the markets that ranked highest for acquisition targets across the globe include Scandinavian cities Stockholm (66.7%) and Copenhagen (62.5%). Chicago, Milan and San Francisco round out the top five cities, according to Arthur de Haast, global CEO for Jones Lang LaSalle Hotels.

Upscale assets continue to be the most sought after asset type globally, though midscale properties have gained favor. Private equity and real estate funds are the most likely buyers around the world in the near-term.

The ‘sell’ sentiment continues to be strongest in EMEA at 13.8%, and lowest in the Americas at 7.8%. The Spanish resorts continue to top the global list of ‘sell’ targets (60%), followed by Marrakech (40%) and Moscow (36.4%).

On a global weighted average basis, the proportion of investors exhibiting a positive outlook for performance fundamentals over the next six months has softened by 27%, but is still at a more favorable level than one year ago, added de Haast.

The share of investors that have a positive performance outlook for the next two years has been only marginally impacted, decreasing by less than 12%.

The survey found that hotel performance expectations continue to be highest for the global gateway cities for both the short and long term. Investors exhibited the highest six-month performance outlook for San Francisco, London and New York, followed by Istanbul, Hamburg, Munich, Paris, Boston, Miami, Singapore and Sydney.

In terms of regional shifts in investor sentiment, the Americas saw the most pronounced decline of the three regions, but the proportion of investors indicating a positive outlook still matches the level recorded one year ago.

Investors active in EMEA exhibited weakened hotel operating performance expectations both in the short and medium term. “Yet fundamentals have not shown any deterioration, and on a city level, 54% of all cities tracked in EMEA are anticipated to show growth in the coming six months and 81% when considering the medium term,” said de Haast.

In contrast, Asia Pacific posted little change (-2.1 and -1.9 percentage points respectively) with investor sentiment still weighted firmly in favor of continued RevPAR growth. As a result, the Asia Pacific region, home to a number of emerging powerhouse economies, now has the highest positive investor expectations over the next six months.