3 Markets To Consider for Hotel Investment Funding

Hotel Developments, international hotel developments, golf courses..etc are still popular developments in 2010; the funding condition in United States is now much better than compared to 2009; but with weakness in USD; international funding sources should be considered as alternative funding sources for your hotel developments; let’s look at some of the possible funding sources:

1. Japan: Japan remains as the single largest international investor in real estate projects in United States, this include hotels and other hospitality assets. Japanese firms, if you recall, were very active back in the 1980s when they purchased significant number of hotels & developments worldwide including Australia, United States and many parts of Europe. One advantage about Japanese investors is their “institutional approach”, although this also means it will take longer time for negotiations. Weakness in Japanese local real estate markets have prompted many Japanese firms to invest in international markets; international investments are usually made by its large development firms or through many Japanese REITs (J-REITs). Japanese firms have also been very active in South America especially Brazil, Chile and Peru.

Japanese firms have been using their low interest loans as advantages in international investments for many decades, the best way to start is to contact those Japanese property firms that have international representative offices; or through Japanese financial institutions such as Nomura, Tokyo Marine & Fire (which have their own investment division) or Daiwa. You may also find our Asia Pacific Real Estate Companies Guide with many useful leads around Asia as well.

2. Hong Kong: Next on our list from Asia is Hong Kong; which is a property mega-center, investors there breath and eat property investments all the time. Hong Kong investors have been quite a dominating power in hotel sectors across much of Asia Pacific regions; and also in Central & Latin America. Similar to Japan, Hong Kong’s property investment sector is also institutionized; with a large number (and growing) of REITs and property developers. Hotel Investors from Hong Kong usually are either REITs, Property Developers or Hotel Operators which are often asset owners as well.

Transparency is another advantage dealing with Hong Kong investors, they have adopted the western accounting standard; and it is very easy for institutions to invest in international opportunities. At this point, Hong Kong investors have been very active in South East Asian hotel development opportunities; Central American, and in North America, we have also seen investments made in Florida, Mexico, California and many parts of Canada; we believe the trend will continue over the next 3 to 5 years. Debt financing is not really a  major issue in Hong Kong, and a lot of wealth Chinese money have also flown into Hong Kong as a base to invest in international opportunities.

3. Australia: The world’s 2nd largest REIT market is certainly no foreigner when comes to international real estate investments. In fact, we when put together our Asia Pacific Real Estate Companies Guide, Australian REITs / Developers have accounted to almost 1/3 of the companies; well ahead of Japan and Hong Kong. This is because Australia was one of the earliest adopters of “REIT” structure; and this has been well supported by its superannuation fund industry which currently ranks 4th in the world.

Although Australian investors are conservative in nature; this does not apply to real estate investments, at least from institutions’ perspectives. Australian REITs have been investing heavily in international markets, some have allocated their funds to as much as 80% of the funds in global markets. Hotel investments are not new, however, still lags behind commercial & retail properties; specific groups such as Stockland, Mirvac, Lend Lease even construction firms like Leighton Holdings; or those associated with banks like Colonial; or REITs like Abacus are all likely investors you can contact if you have hotel projects.

We will continue discuss more potential international real estate financing destinations in our future articles. For those interested in international real estate investors, please visit our website http://researchwhitepaper.com for a range of companies guides we have available.