Hotel investors remain on the lookout for potential buying opportunities despite the ongoing tourism shutdown, with the industry fire for new developments burning bright, new data released today by CBRE Hotels reveals.
According to the real estate firm’s latest Hotel Market Survey, 72% of those surveyed said they were only mildly fazed by the effects of the Coronavirus and that they were planning on investing as much or more than the levels of December 2019.
More than half of those polled classified themselves as an Investor or Owner-Operator, with the remainder either a sole Operator or Developer. The majority of investors surveyed said they planned on re-rating the hotel sector as an opportunity in the coming months but that it would only be a slight revision of its potential.
In a positive upswing of fortune, nearly half of those polled said they believed numerous buying opportunities would present themselves for less-geared investors, while the majority believed banks and financial institutions will adopt a ‘wait and see’ attitude in the short-term as travel restrictions begin to be lifted at different rates around the world.
Capital cities will be hardest hit by the crisis, many survey respondents believe, with city asset values expected to drop by at least 15% over the next six months. Results were mixed among this question, with opinion also fairly evenly swayed towards a belief that these assets will depreciate by smaller amounts of between 5% and 15%.
CBRE Hotels Regional Director, Valuation & Advisory Services, Troy Craig, said most hoteliers surveyed believed their medium-term investment intentions were not swayed by the impact of COVID-19.
“Our survey found that investor appetite has not deteriorated by as much as may have been expected under the current circumstances with 72% of respondents still prepared to invest the same or more in the sector relative to December 2019,” he said.
“We are confident the Australian hotel market will fare better than most other countries, and that there will be a strong recovery once the government reopens the economy,” added CBRE Hotels National Director, Wayne Bunz.
“Once again, this will highlight the resilience of our hotel economy with a larger amount of capital sitting on the sidelines ready to be invested.”