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The Asia Pacific (Apac) hotel industry is expected to see continued strong investment activity in 2025, based on the latest findings from a CBRE survey. According to the consultancy’s 2025 Asia Pacific Hotel Investor Intentions Survey, over 72% of hotel investors surveyed in November and December last year have plans to acquire more hotel assets this year.
Around 45% of respondents indicated their intent to increase their purchasing volume by more than 10% in 2025. Steve Carroll, head of hotels, capital markets, Asia Pacific, CBRE, explains, “Following a strong performance over the past 18 months, investors have optimistic pricing expectations for hotel and living assets in Apac in 2025.”
The survey found that the rebound in tourist arrivals, particularly in countries like Japan, Singapore, and Australia, has boosted investor confidence. “The rise in international arrivals from key markets has led to an increase in Apac hotel room rates, ensuring steady income growth for hotel operators from last year,” adds Carroll.
Furthermore, investors are encouraged by the limited hotel supply in Apac. Citing 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.
The breakdown of investment intentions by investor type revealed that Real Estate Investment Trusts (REITs) had the highest net buying intentions at 22%. This marks a significant contrast from last year’s survey, which recorded a -13% net investment intention for REITs. “After several years of negative net investment intentions, REITs have indicated their plans to acquire assets in 2025,” the report states.
Institutional investors followed closely with a net buying intention of 12%, followed by property funds at 10%. CBRE notes that private equity and real estate funds for hotels have become more active in 2024 and this trend is expected to continue this year.
However, private investors and high-net-worth individuals are anticipated to have fewer hotel acquisitions this year. “After being the most active buyer type in the region for two years, private investors have stated their intention to sell more assets in 2025, taking advantage of the improving market sentiment after acquiring assets during a period of price dislocation,” the report adds.
Investors are targeting upscale and upper midscale assets for investment in 2025, according to survey respondents. CBRE notes that in certain markets, assets have been reevaluated to a point where investors believe they can achieve value-add returns by acquiring properties with core risk profiles.
As a result, the upscale and upper midscale hotel categories were voted as the most attractive asset types for investment this year, overtaking the upper upscale category, which was the top category in last year’s survey.
The report explains this shift by the flexibility and potential for value-added opportunities offered by the upscale and upper midscale segment. This includes the redevelopment, adaptive reuse, and rebranding of existing properties, which are less expensive alternatives to new developments.
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This segment also has a relatively lean labor pool compared to higher-tier assets, reducing labor and cost pressures. Amid this shift, investors are also turning to long-stay or hybrid hospitality models. CBRE cites investors’ growing interest in converting assets into co-living spaces as an example. This trend is expected to gain traction in places like Japan, Hong Kong, and Singapore, where there is demand for affordable accommodation in markets with rigid rental policies.
Other emerging trends include a preference among investors for assets with vacant possession at the time of acquisition, allowing for flexibility in terms of operator selection and refurbishment works. Limited-service hotels have also seen increased interest from respondents, as investors continue to focus on minimizing operational costs.
Tokyo remains the top choice among hotel investors, 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 ranked high, attributed to strong hotel fundamentals such as growth in daily rates and underlying operating profits. Seoul also stands out due to an increase in visitors from mainland China, leading to a rise in daily rates and higher investor activity in recent months.