Jones Lang Lasalle: It is expected that the hotel investment transaction volume in Hong Kong will be approximately USD 500 million in 2024. The government's pilot scheme is expected to stimulate hotel buying and selling transactions

According to the latest analysis from Jones Lang Lasalle (JLL) reported by the Zhitong Finance and Economics APP, the hotel investment market in Hong Kong remains active this year, with buyers becoming more selective and focusing on prime locations in the city center. JLL estimates that the transaction volume of Hong Kong hotels in 2024 will be around USD 500 million (approximately HKD 38.9 billion), a decrease of about 35% from 2023. Due to the narrowing price gap commonly seen this year and the expected further recovery of the Hong Kong tourism industry, investment activities are expected to increase in 2025. It is anticipated that the government's pilot program to encourage the conversion of hotels or commercial buildings into student accommodations will stimulate hotel transactions.

The hotel industry in the Asia-Pacific region is benefiting from increased investment activities, improved interest rate environment, and overall positive macro and microeconomic developments. The total hotel investment in 2024 is expected to reach USD 12.2 billion, a 4.3% increase from last year's USD 11.7 billion.

Kelvin Chan, Head of Capital Markets at JLL Hong Kong, stated, "Currently, many hotels in Hong Kong have high vacancy rates, especially three and four-star hotels are significantly affected by changes in consumer spending patterns. The new Hong Kong government's Policy Address introduces a pilot scheme to convert hotels into student dormitories, which simplifies procedures in planning, land administration, and building plan approval, encouraging the market to convert hotels into student accommodations through self-financing and private means. This move is expected to stimulate market investment intentions, attract more developers and investors to participate, and inject new momentum into the market."

In the first nine months of 2024, the cumulative hotel transaction volume in the Asia-Pacific region reached USD 9.05 billion, a 15% increase year-on-year (2023: USD 7.87 billion), accounting for 90% of the total transaction volume in 2019. Driven by large transactions, cross-border investments have significantly increased in the first nine months of this year, with Japan being particularly prominent, while Australia's transaction activities have unusually stagnated.

Nihat Ercan, CEO of JLL's Hotels & Hospitality division in the Asia-Pacific region, commented, "Benefiting from positive regional macroeconomic prospects, favorable interest rate policies, and stable consumption trends, we believe that the total hotel investment for the year will surpass last year. Investors continue to show strong interest in large-scale investment projects in the Asia-Pacific hotel industry, and we expect the transaction activity in the fourth quarter of 2024 to remain active. Therefore, we have raised our investment forecast to USD 12.2 billion."

JLL's analysis shows that in local currency terms, the average daily room rate (ADR) for hotels in the Asia-Pacific region has increased by 19% compared to the previous peak period (2018-2019). Additionally, considering the strong growth in business travel offsetting the decline in leisure tourism, most markets still have room for improvement in hotel occupancy rates, potentially reaching pre-pandemic levels. However, the full recovery of occupancy rates is expected to take time as the slow recovery of the Meetings, Incentives, Conferences, and Exhibitions (MICE) sector, coupled with ongoing short-term economic issues in mainland China, continues to impact the overall industry performance