JLL Hotel Investor Survey Highlights Less Appetite for Risk
The recently released Jones Lang LaSalle Hotels "Hotel Investor Sentiment Survey" has concluded that investors have less of an appetite for risk and are actually raising return profiles to cover possible downturns. Average global cap rates for investors have now risen to 9.8% which is in increase by 100 basis points. Leveraged IRR's (internal rates of return) have not been pegged at 20.2% and are up 120 basis points. These are the largest increases since the surveys were started.
For new developments it's highlighted that stress in developed markets is expected to continue along with its focus on the banking systems hence capital or investments into developing countries such as Thailand are expected to remain at a substantially reduced level. A positive trend is that with little capital available there will be limited new green field projects, so that current supply and demand surplus's can be absorbed into the market at a greater pace.
According to the research most buyers at present are either owner/operators or private equity and real estate investment funds. The document notes that there is no real expectation for recovery over the next six months and that trading performance is expected to erode during this time. Closing the report out its noted that asset pricing remains a challenge, though transaction activity is expected to increase as some owners are becoming willing to meet buyer pricing thresholds.