AS regional investors’ appetite for hotels around the world rises, leading hotel investment services firm Jones Lang La Salle Hotels has flagged up markets beyond traditional four-and five-star hotels.
The firm has set up a new office in the Middle East to service the large amounts of capital available for investment in the hotels and hospitality sector, regionally and internationally.
The acquisition of the RSP Group, a Dubai-based real estate investment and advisory firm, gives Jones Lang LaSalle better access to rapidly growing regional markets, in which it has been increasingly active in the past 18 months.
In an interview with TTN, Arthur de Haast, global CEO of Jones Lang LaSalle Hotels, said, “Clearly it is a region that is seeing huge amount of activity and investment in the hotels and hospitality sector generally and we see the opportunity to grow the services that we provide in this region and in particular to expand our understanding of the market.”
Added Thierry Loué, managing director for Jones Lang LaSalle MENA, “We want to provide advisory services to the investors in the region in terms of positioning and opportunities on one side and on the financial side, to by helping them put together the right set up in terms of structuring to proceed with the development of those massive investments in the hotel leisure and tourism sector throughout the region.”
The firm is already actively advising regional investors on investing outside the region, de Haast said, and a local office will only help that.
Arab investors, primarily from the UAE, invested almost $1 billion last year in European hotels, he said, adding that so far this year, investors have shown similar levels of interest.
Historically, Arabs have particularly liked trophy hotel investments in developed markets, but that trend has changed, said de Haast. “From the capital flow we are seeing at the moment, there is a strong interest in North America, more so in Europe including some emerging eastern and central European markets, as well as a strong interest in Asia, in Thailand, China and India, and of course, Indonesia and Malaysia, which culturally they have a great affinity with.”
Again, the investments are across the spectrum, beyond luxury properties. While investors tend to put their money on a more diverse range of properties outside the region, they are now looking at mixed offerings closer home. “Investors from this region are diversifying beyond the trophy-asset hotels to such concepts as Travelodge and EasyHotel, which Emaar is working with in India and the Middle East.
Management companies looking at bringing in lower-end brands, then, could well find markets beyond four-and five-star hotels. The UAE alone will see some 55,000 luxury four- and five- star hotel rooms in the next five years, the firm estimates.
“There is significant pipeline of hotels in [the four and five-star] category under development. I think in time, there will be the need for more mid-priced and limited-service products which is why some investors have begun focussing on that,” said de Haast.
Products like serviced apartments and condominium hotels are likely to see an increased volume of development. “I think we are also going to see more and more niche products that are more sensitive to the requirements of some of the people in the region,” said Loué.
by Clark Kelly