Sovereign wealth is the driving force behind a new vehicle in Asia created by Host Hotels that has firepower of up to $2bn for acquisitions.
An affiliate of GIC Real Estate, the property investment wing of the Government of Singapore, is injecting a maximum of $450m in equity into a JV with Host who will contribute the remaining 25%, up to $150m.
GIC has 48% of the vehicle which, together with Host (with 32.1%) and a Dutch pension fund (19.9%), owns 10 hotels in Europe with around 3,200 rooms. And now GIC is working with Host to buy in Asia and Australia.
"There are increasing opportunities in both emerging and developed markets," said Dr Seek Ngee Huat, president of GIC Real Estate.
Host will earn a promote based on achieving certain return thresholds and an affiliate of Host will provide asset management services.
There is certainly opportunity in the region. According to figures released last week by the Pacific Asia Travel Association, average annual arrival growth in Asia Pacific will be 7% to 8% to the end of 2010 by when the total number of visitors will be close to 500 million, with two-thirds of arrivals generated within the region.