Financial Times

Hotel Investments Peak in Asia in 2013

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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.”

Modernizing China, One Small Business at a Time

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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.”