Featured Topic: Financial Times

New research from Jones Lang LaSalle’s Hotels & Hospitality Group has revealed that hotel investment volumes in Asia have increased 145% since last year.

Mike Batchelor, Managing Director of Investment Sales at H&H, Jones Lang LaSalle, said: “Hotel trading performance in Asia has experienced a significant turnaround over the past two years and nowhere more so than in Singapore. This quarter’s landmark transaction of the Grand Park Orchard Hotel and adjoining Knightsbridge retail podium heralded the single largest asset deal in the city’s history. Going forward, we are aware of approximately $1.3 billion in exchanged contracts that will contribute to a very strong pipeline over the remainder of the year.”

“As investor confidence in the region continues to rally, the availability of investment grade hotels is becoming increasingly scarce as, as a result, we are seeing buyers turn their attention towards markets such as Thailand, Seychelles and the Maldives,” he added. “The Maldives is proving a particular hotspot where contracts have just been exchanged on what will be our fourth transaction in the country in as little as two years.”

He continued, “While the market is beginning to feel some restriction from a limited pipeline of hotel listings, the unrelenting strength of demand across both private and institutional investors will ensure that transaction volumes remain healthy. Given the volume of hotel deals that are due to settle before year-end, we are increasing our regional full year total sales projection from $3.5 billion to $5.5.billion, confirming 2013 as the strongest year since 2008.”

Managed by Amber Capital Italia SGR, the newly launched UCITS Amber Italia Equity Fund seeks to “return consistent absolute returns by investing on a long/short basis primarily in European equities, with a focus on Italian investments. The fund is using a fundamental value and bottom-up approach. The investment strategies employed may encompass, among other things, any or all of the following strategies: directional long or short positions with or without a catalyst; long/short equity pairs with or without a catalyst; capital structure arbitrage; risk arbitrage; share class arbitrage; company holding discounts; and relative- and fundamental-value.”

Joseph Oughourlian, founder of Amber Capital Group and Amber Capital Italia SGR, said he was “very proud of the launch of the Amber Equity Fund as it further strengthens our commitment to Italy, a country in which we strongly believe and where we have been present for many years. We are also confident that transforming the Amber Italia Equity fund into a UCITS fund will widen our investor base.”

Hong Kong’s hedge fund world is fast taking center stage on the financial scene. In December of 2007 at the 5th Annual Hedge Funds Conference, Secretary for Financial Services & the Treasury, Professor KC Chan said that he thinks Hong Kong is becoming the hedge fund hub of Asia. He quoted figures that showed that the hedge fund presence in Hong Kong has moved from about 160 funds in 2001 to about 1240 in the first half of 2007.

As he said, “Hong Kong got the largest number of new Asia Pacific hedge funds launched in 2006 as well as in the first half of 2007, ahead of Singapore, Japan and Australia. We have adopted various tax measures to promote the growth of the industry. Since 2006, offshore funds have been exempted from profits tax. This brings us in line with other major financial centres such as New York and London. More importantly, the measure helps attract new offshore funds to come to Hong Kong and encourages existing offshore funds to continue to invest in Hong Kong.”

As he continued, “We have also abolished estate duty since last year to encourage local and overseas investors to invest in Hong Kong. To further enhance our competitiveness, the Chief Executive announced in his Policy Address in October this year that our profits tax will be reduced from 17.5% to 16.5% in 2008-09. Given our already low and simple tax regime, these measures will further enhance our attractiveness to overseas fund managers.”

Western companies have become increasingly more attracted to China’s consumer market, despite the major commitment needed in order to become truly involved. According to one observer,  entering the Chinese market is no longer a simple feat.

Once, China would jump at an opportunity with a Western brand. Today, however, the country’s coastal cities are bursting with investment and equity firms, as well as numerous other western businesses. Major competition and the increase of prices in the sector are likely to discourage newcomers.

There are a few suggestions. First, he recommends selling a product that is actually needed by the Chinese. Jokingly, he said a toaster would not make great business, as the Chinese “don’t like to eat hard things.”

Second, he said, is checking that the product is acceptable to the Chinese market. If not, be sure to modify it to fit the requirements.

Lastly, it has been suggested studying the domestic products that have already entered the market. He added that there may be “established players” in the market already, and Western businesses will need a strategy to compete with them.

Last year, some predicted an increase of small Western businesses in China. When asked by the BusinessNewsDaily, he said: “There is significant intrinsic demand built up in the 1.3 billion population of China, which will allow creative entrepreneurs plenty of opportunities to expand overseas in 2011 and beyond. Small businesses have the advantage of being nimble and able to seize even the slightest niche markets by introducing foreign products of unique distinction. The same goods that are well received by Americans are often welcomed by the Chinese, which means there will be many repeats of historically successful product lines. After all, both sides have more similarities than differences, and we can expect further convergence in the coming years.”