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Asia Pacific Hotel REITs Down 40% on COVID-19 Pandemic

Asia Pacific Hotel REITs Down 40% on COVID-19 Pandemic

Across all sectors in the region, Hotel REITs performed the worst, followed by retail

by Jeroen Vreeker, Global Property Research

April 6, 2020 — The coronavirus pandemic impact is felt widely, putting all sectors in the GPR/APREA Composite REIT Index into the negative territory in March. The hotel sector was the worst hit, leaving it 39.8% down compared to last year’s performance. 

Hotels in the region were affected by falling occupancy rates and revenue per available room (RevPAR) due to lockdowns and travel bans across the world. 

According to STR, a global hospitality-focused data firm, hotel occupancy fell 37.7% in Asia Pacific in February, along with a 36.5% decline in RevPAR. 

By country, China’s occupancy dropped the sharpest (75.9%) during the month. Singapore hotel occupancy was also down 46.9%, South Korea by 30% and Japan by 22.4%. 

The declines for other REIT sectors in the region ranged from 31.9% to 14.4%, with the Healthcare sector performing best for the month. 

GPR/APREA Composite REIT Index -25.6% -14.4% -39.8% -14.9% -23.0% n/a -19.7% -31.9%

Overall, a sharp 24.3% fall was seen in the total return performance for Asia Pacific REITs in March 2020. For the year’s first quarter, the GPR/APREA Composite REIT Index closed 28.7% down. 

The regional REITs also underperformed against regional equities, which only contracted 11.5% in March 2020 and 19.2% in Q1 2020. The table below shows the total return performances realised in the previous month for the various currencies available for the GPR/APREA Composite REIT Index.

GPR/APREA Composite REIT Index -24.2% -24.2% -23.0% -24.3%

The comprehensive GPR/APREA Composite REIT Index covered 172 Asia Pacific REITs with a combined free float market capitalisation of US$229.3 billion as at March 31, 2020. Following the latest quarterly rebalancing of the GPR/APREA index series, three additional REITs (China Merchants Commercial REIT (CHN), LOTTE REIT (KOR) and Lendlease Global Commercial REIT (SGP)) entered while Amata Summit Growth Freehold and Leasehold REIT (THA) fell out due to insufficient size.

The table above and the range below indicate that returns across countries and the relevant property sectors seem to reflect the different exposures to the dislocations caused by the coronavirus pandemic and the social distancing measures aimed at slowing its spread.


USD-denominated data as per 31 March 2020

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