In 2014, Asian investment in European hotels increased by 90%.
According to CBRE, Asian investment in European hotels would exceed $22.7 billion in 2015, owing to the loosening of domestic limitations on outbound investment. house for sale
In 2014, Asian hotel real estate acquisitions in Europe increased by 90% year over year and by 20% internationally. Due to a lack of investable stock in domestic markets, CBRE predicts a 58 percent increase in hotel acquisitions by Asian investors in Europe this year.
CBRE Hotels Asia Pacific Executive Managing Director Arthur Buser remarked, “Due to rigorous rules, particularly surrounding offshore assets, Asian institutional funds are often under-allocated to real estate. The majority of their international investments are in liquid assets including stocks, cash, fixed income, and government bonds. This is beginning to change, as China, South Korea, Taiwan, and other governments have begun to enable abroad direct investments, bigger real estate allocations, and a streamlined clearance procedure.”
“Fixed-income lease durations are frequently longer than other asset categories, and returns are now higher than traditional real estate sectors, even in premium locations, making hotel real estate an appealing asset class for insurance firms diversifying their portfolios. This has attracted Asian investors to hotels in major European cities such as Paris, Frankfurt, and, in especially, London.”
According to CBRE, Asian insurers’ investment assets would expand from US$129.3 billion in 2013 to US$204.2 billion in 2018. This is due to the combined effect of a growth in the overall amount of assets owned by Asian insurers and increased liberalization. This would result in an additional US$75 billion in real estate investment, including both direct and indirect investment.
A major chunk of worldwide hotel deals will be completed by Asian capital in 2015, according to high-profile acquisitions by Chinese investment companies into abroad real estate, notably hotels. Fosun, China’s largest privately owned business, paid US$25 million per share for French Club Med, valuing the firm at US$953.5 million. The Waldorf Astoria hotel in New York was recently sold to China-based insurance giant Anbang Insurance, making it the most costly hotel transaction in the United States to date. Sunshine Insurance Group, based in Beijing, has announced plans to purchase the Baccarat Hotel New York for US$230 million.
Jileen Loo, EMEA Director of CBRE Hotels, said, “REITS, high-net-worth individuals, and emotional purchasers made up the initial wave of Asian hotel buyers, who were primarily aiming to acquire trophy hotel assets for wealth preservation and prestige. Asian insurance funds, mainly from China, are currently heavily investing in the global hotel business as a result of a series of relaxations in domestic government laws. In domestic markets, these purchasers are discovering a scarcity of investable stock, and when quality assets do become available, competition is severe.”
“Legal liberalization would hasten the pace of Asian insurance companies’ global real estate investments, and we foresee additional foreign hotel purchases as regulators develop confidence in monitoring such investments and insurance firms become more savvy about investing worldwide.”
