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January 8, 2012

Global hotel investment volumes rise in H1 2011

Improved real estate investment trusts and a revival of the debt market boosted global hotel investment volumes during the first half of 2011, according to Jones Lang LaSalle's Hotel Investment Outlook 2012 report.

Improved real estate investment trusts and a revival of the debt market boosted global hotel investment volumes during the first half of 2011, according to Jones Lang LaSalle’s Hotel Investment Outlook 2012 report.

In the second half of the year, economic uncertainty affected growth, particularly in the US, but investment still reached Jones Lang LaSalle’s forecast of $30bn worldwide, an increase of 13% over 2010’s investment. The report forecasts that despite continuing economic uncertainty, global hotel transaction volumes will hold steady in 2012 to again reach upwards of $30bn in deals.

Jones Lang LaSalle Hotels chairman Arthur de Haast said that private equity players increased investment activity in the second half of 2011, and will remain ambitious in 2012.

"Deficient debt markets and limited availability of attractive acquisition opportunities will likely hamper higher levels of activity," he said. "Still, these players will selectively acquire assets in secondary locations, as well as distressed portfolios and non-performing loans."

The report observed that public companies such as real estate investment trusts should focus on existing stable acquisitions rather than new ones, while private equity firms and institutional investors must liquidate some acquisitions.

By placing stressed assets into the market, institutions with significant real estate exposure have started taking action in the UK, the US and Ireland, although activity has yet to start in Spain and Japan.

While China and India have good momentum in the upcoming real estate investment trusts sector, activity is building in Central and Eastern Europe. The report stated that growth has also been observed in Poland, Russia and South America.

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