New York Tabbed as Top Hotel Investment Market

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Despite a 20 percent drop, New York was the most active hotel investment market in the world in 2012, exceeding Paris and Hong Kong, according to a new report from Jones Lang LaSalle.

New York is expected to maintain the top spot in 2013, as investors look for core assets. Hotel transaction volumes are expected to reach $2.4 billion in 2013, JLL reports. After reaching a record high in 2011, hotel investment volume in New York decreased to $2.7 billion last year.

Private equity funds will remain the largest buyer group, due to "their significant buying power and risk tolerance," according to Jones Lang LaSalle's Hotels & Hospitality Group's Hotel Intelligence New York report.

"REITs will also feature notably, and continue to make acquisitions of core properties," said Jeffrey Davis, managing director of Jones Lang LaSalle's Hotels & Hospitality Group. "Off-shore capital from Asia and the Middle East will continue to target trophy and high-profile assets in Manhattan as well."

In 2012, private equity firms and real estate investment trusts (REITs) accounted for 54 percent of purchases by volume in Manhattan. The city's largest transaction in 2012 was Strategic Hotels & Resorts and KSL Capital Partners' purchase of the 509-room Essex House for $362 million, JLL reports .

New York posted double digit increases in occupancy in January, the largest growth of any of the top 25 markets, according to the latest report from STR Global, the analysis firm.