Jones Lang LaSalle’s (JLL) hospitality experts project that global hotel transaction volumes will reach an eight-year high between $65 to $68 billion in 2015, representing a 15 percent increase over 2014 volumes. JLL’s forecast is based on the firm’s 2015 Hotel Investment Outlook
Transaction volumes in Europe, the Middle East and Africa is expected to garner $24.7 billion this year. Activity in the Americas region will lead the way and could reach $34.5 billion, while Asia-Pacific’s numbers are projected to tally $8.5 billion in 2015.
United States-based private equity funds and Middle East investors are expected to remain among the top exporters of outbound capital. However, it is thought that the Chinese will lead in terms of year-over-year increases in capital deployed.
Chinese outbound capital experienced unprecedented growth in 2014 behind the strength of China’s growing economy and appreciating currency. China’s Ministry of Commerce’s policies relaxed restrictions on big-ticket foreign investments and simultaneously loosened the approval process for overseas purchases. This adjustment allows Chinese investors better access to the world’s key global markets such as London, Paris, New York, San Francisco, and Sydney.
JLL expects Chinese outbound capital to account for $5 billion in 2015, a five-fold increase on 2014. This places Chinese investors among the ranks of top exporters such as the United States and the Middle East, when a few years ago China did not rank in the top 10.
For the Americas, in particular, private equity funds are ready to deploy capital and top targets that include select-service portfolios, resorts, and secondary markets. Canada’s hotel market continues its robust performance while Mexico’s liquidity continues to rise due to the traction gained by new REIT-like investment vehicles formed in 2012. Investors are cautiously approaching Brazil’s market, but the northern region of South America has become an investor hotspot, with Colombia leading. In the U.S., debt remains readily available and hotel CMBS issuance is back to more than 60 percent of its previous peak.
