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Hotel investments in Europe by Asians seen rising to US$22.7 bln in 2015, says CBRE
Asian investment in European hotels will reach $22.7 billion in 2015, fuelled by the liberalization of domestic controls governing outbound investment, according to the latest research by CBRE
The Asset 26 Feb 2015

Asian investment in European hotels will reach US$22.7 billion in 2015, fuelled by the liberalization of domestic controls governing outbound investment, according to the latest research by CBRE Group.

 
Asian hotel real estate acquisitions in Europe surged by 90% in 2014 from a year earlier, and by 20% globally. With limited investable stock available in domestic markets, CBRE forecasts that hotel acquisitions by Asian investors could rise by as much as 58% in Europe this year.
 
“Asian institutional funds are generally under-allocated to real estate because of stringent regulations, especially around overseas assets. Most of their overseas allocations are in liquid assets such as equities, cash, fixed income and government bonds,” says Arthur Buser, executive managing director, CBRE Hotels, Asia Pacific.
 
This is changing as China, South Korea, Taiwan and other countries have started to allow overseas direct investments, higher allocations to real estate, and a simplified approval process, says Buser.
 
“Hotel real estate is an ideal asset class for insurance companies diversifying their portfolios—fixed-income lease terms are often longer than other asset types, and yields are presently above traditional real estate segments, even in prime locations. This has made hotels in large European cities such as Paris, Frankfurt and particularly London, attractive for Asian investors.”
 
CBRE predicts that the combined effect of an increase in the total value of assets held by Asian insurers and increasing liberalization will result in their investment assets growing from US$129.3 billion in 2013 to US$204.2 billion in 2018. This would translate into additional inflows of about US$75 billion into real estate—including direct and indirect investment.
 
High-profile acquisitions by Chinese investment groups into overseas real estate, particularly hotels, indicate that a large portion of global hotel transactions will be completed by Asian capital in 2015.
 
Fosun, China’s largest privately held conglomerate, acquired French Club Med for US$25 million per share, valuing the company at US$953.5 million. Hilton Worldwide recently completed the sale of the Waldorf Astoria hotel in New York to China-based insurance firm, Anbang Insurance, the most expensive sale of a US hotel to date. Beijing counterpart, Sunshine Insurance Group, has announced plans to buy the Baccarat Hotel New York for US$230 million.
 
“The first wave of Asian hotel buyers was largely by REITS, high-net worth individuals or emotive purchasers looking to acquire trophy hotel assets for wealth preservation and prestige. Due to a series of relaxations in domestic government policies, Asian insurance funds, particularly from China, are now entering the global hotel market in a big way. These buyers are finding limited investable stock available for consideration in domestic markets and when quality assets become available, the competition is fierce,” says Jileen Loo, who was recently appointed director, CBRE Hotels, EMEA to focus on European-bound global capital with a particular emphasis on Asia.
 
Loo joins the CBRE Hotels team from China, where she spent eight years working with corporate investors, state-owned enterprises and real estate related government bureaus on a number of significant transactions.
 
CBRE Hotels currently has over US$2.3 billion worth of assets as secured mandates to sell on behalf of owners.
 

 

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