According to recent findings from a CBRE survey, the Asia Pacific (Apac) hotel sector is expected to continue experiencing strong investment activity in 2025. The consultancy’s 2025 Asia Pacific Hotel Investor Intentions Survey revealed that over 72% of hotel investors who were surveyed in November and December last year plan to acquire more hotel assets this year. Additionally, 45% of respondents indicated that they intend to increase their purchasing volume by more than 10% in 2025.
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Steve Carroll, head of hotels, capital markets, Asia Pacific at CBRE, notes that after performing well over the past 18 months, investors anticipate optimistic pricing expectations for hotel and living assets in Apac in 2025. The rebound in tourist arrivals, particularly in places like Japan, Singapore, and Australia, has led to an increase in hotel room rates, ensuring continued income growth for hotel operators.
The survey also found that investors are encouraged by the limited hotel supply in Apac. According to data from hospitality data intelligence group STR, the hotel supply pipeline in Apac is expected to grow at a CAGR of 2.2% between 2024 and 2028, which is significantly lower than the 5% CAGR logged between 2013 and 2023.
In terms of investor type, real estate investment trusts (REITs) showed the highest net buying intentions at 22%, a stark contrast to the -13% recorded in last year’s survey. The report explains that after several years of negative investment intentions, REITs are now looking to acquire assets in 2025. Institutional investors had the second-highest net buying intentions at 12%, closely followed by property funds at 10%. CBRE also notes that private equity and real estate funds for hotels were more active in 2024 and this trend is expected to continue in 2025.
However, private investors and high-net-worth individuals are expected to make fewer hotel acquisitions this year. After being the most active buyer type in the region for two years, private investors are now anticipating a higher level of selling activity in 2025 to capitalize on improving market sentiment after acquiring assets during a period of price dislocation.
The survey also revealed that respondents favored a value-add investment strategy for 2025. CBRE observed that in select markets, assets have been repriced to the point where investors believe that they can achieve value-add returns by acquiring 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, overtaking the upper upscale category that topped last year’s survey.
The report credits this shift to the operational flexibility and greater potential for value-added opportunities in the upscale and upper midscale segments. These include redevelopment, adaptive reuse, and rebranding of existing properties, which offer a more cost-effective alternative to new developments. In addition, these segments generally require a leaner labor pool compared to higher-tier assets, which reduces labor and cost pressures.
Amid this shift, investors are also exploring long-stay or hybrid hospitality models. CBRE points out that there is a growing appetite among investors to convert assets into co-living spaces. This trend is expected to continue gaining traction in places like Japan, Hong Kong, and Singapore, where there is a demand for affordable accommodation in relatively inflexible rental markets.
Other emerging trends include a greater preference for assets with vacant possession at the time of acquisition, allowing for flexibility in terms of operator selection and refurbishment works. Limited-service hotels also saw higher interest from respondents as investors remain focused on minimizing operational costs.
In terms of preferred cities for hotel investments, Tokyo retained its top spot, supported by low-interest rates and stable income streams generated by hotel properties. Osaka also ranked among the top five cities for similar reasons. Singapore and Sydney also made the list, with CBRE attributing this to solid hotel fundamentals, including growth in daily rates and underlying operating profits. Seoul also stood out as more visitors from mainland China have driven daily rates in recent years, leading to an increase in investor activity in recent months.