Hong Kong investors keen on overseas assets should now focus on extended-stay hotel market
As more investors become educated about the sector, this relatively new asset class is becoming more recognised for its high growth potential
Hong Kong investors’ recent buying spree of trophy overseas office buildings, such as the record £1.3 billion (US$1.7 billion) purchase in London of the popularly christened Walkie Talkie building, has been in the spotlight.
But it is not just commercial towers that Hong Kong investors have been enthusiastically buying abroad. Hotel and leisure sector assets have also been topping their shopping list and one area that is particularly causing excitement is the extended-stay market.
Hong Kong investors have been very active overseas in the traditional hotel market. In the UK alone, recent acquisitions include HK CTS Hotels buying Kew Green Hotels for £400 million and Hongkong and Shanghai Hotels buying a 50 per cent stake in the Peninsula London hotel development next to Hyde Park for £107.5 million. But, tipped as the future of the hotel industry with high growth prospects is the extended-stay accommodation market.
This market subsector comprises self-catering accommodation, such as serviced apartments and aparthotels, which is increasingly sought after by leisure and business travellers who value flexibility and independence.
The opportunity is particularly strong in Europe, where the market is very underdeveloped compared to the US. Even there though, extended-stay hotels account for less than 10 per cent of total room supply and have been the fastest growing segment of the US lodging industry for the last three decades.
