According to the latest findings from CBRE, the Asia Pacific (Apac) hotel sector is likely to continue experiencing strong investment activity in 2025. The 2025 Asia Pacific Hotel Investor Intentions Survey conducted by the consultancy last November and December revealed that over 72% of hotel investors intend to purchase more hotel assets this year.
Approximately 45% of respondents indicated that they plan to increase their purchasing volume by more than 10% this year. “After performing well over the past 18 months, investors anticipate optimistic pricing expectations for hotel and living assets in Apac in 2025,” says Steve Carroll, head of hotels, capital markets, Asia Pacific, CBRE. The healthy buying intentions are driven by a rebound in tourist arrivals, particularly in places like Japan, Singapore, and Australia, the survey found. “The influx of international arrivals from key markets has led to an increase in Apac hotel room rates, ensuring that hotel operators will continue to see growth in income achieved last year,” Carroll adds.
Additionally, investors are encouraged by the limited hotel supply in Apac. With data from hospitality data intelligence group STR, CBRE notes that the hotel supply pipeline in Apac is expected to grow at a CAGR of 2.2% between 2024 and 2028 – significantly lower than the 5% CAGR recorded between 2013 and 2023. A breakdown of investment intentions by investor type revealed that REITs had the highest net buying intentions at 22%, a sharp contrast from the -13% recorded in last year’s survey. “After a few years of negative net investment intentions, REITs have indicated that they plan to increase their purchases in 2025,” the report states.
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Institutional investors registered the second-highest net buying intentions at 12%, followed closely by property funds at 10%. CBRE notes that private equity and real estate funds have also become more active in 2024 and this trend is expected to continue in 2025. However, private investors and high-net-worth individuals are expected to engage in fewer hotel acquisitions this year. “After two years of being the most active buyer type in the region, private investors have indicated that they expect to sell more assets in 2025 as they take advantage of the improving market sentiment after acquiring assets during a period of price disruption,” the report adds.
Upscale and upper midscale assets are the preferred investment targets
The survey respondents favored a value-add investment strategy for 2025. According to CBRE, in certain markets, assets have been repriced to the extent that investors believe they can achieve value-add returns by buying assets that reflect core risk profiles. As a result, the upscale and upper midscale hotel categories were voted the most attractive asset types for investment this year, displacing the upper upscale category that led last year’s survey. The report attributes this change in preference to the operational flexibility and greater potential for value-added opportunities offered by the upscale and upper midscale segment. These opportunities include redevelopment, adaptive reuse, and rebranding of existing properties, which are more cost-effective than new developments. The segment also generally requires a smaller labor pool compared to higher-tier assets, thereby reducing labor and cost pressures.
Amid this shift, investors are also increasingly drawn to long-stay or hybrid hospitality models. CBRE cites the growing appetite for converting assets into co-living spaces as an example. This trend is expected to continue gaining momentum in places like Japan, Hong Kong, and Singapore, where there is demand for affordable accommodation in relatively inflexible rental markets. Other emerging trends include a higher preference among investors for assets that are vacant at the time of acquisition, allowing for greater flexibility in terms of operator selection and refurbishment works. Limited-service hotels have also seen a rise in interest from respondents, as investors remain focused on minimizing operational costs.
Tokyo remains the top choice for hotel investors
In terms of preferred cities among hotel investors, Tokyo has retained its top position, supported by low interest rates and stable income streams generated by hotel properties. Osaka also ranks among the top five cities for similar reasons. Singapore and Sydney also made it to the top cities list, with CBRE attributing their ranking to solid hotel fundamentals, including growth in daily rates and underlying operating profits. Seoul also stood out, as an influx of visitors from mainland China has led to higher daily rates in recent years, resulting in a surge of investor activity in recent months.