According to recent findings from a CBRE survey, the Asia Pacific (APAC) hotel sector is expected to see strong investment activity in 2025. The consultancy’s 2025 Asia Pacific Hotel Investor Intentions Survey found that over 72% of hotel investors surveyed last November and December plan to acquire more hotel assets this year. About 45% of respondents indicated a plan to increase their purchasing volume by more than 10% this year.
The survey also revealed that investors are optimistic about the pricing expectations of hotel and living assets in APAC in 2025. Steve Carroll, head of hotels, capital markets, Asia Pacific at CBRE, noted that after a strong performance over the past 18 months, investors anticipate that Apac hotel room rates will continue to rise, leading to growth in income for hotel operators.
The rebound in tourist arrivals, especially in countries like Japan, Singapore and Australia, has also contributed to the healthy buying intentions in the region. The increase in international arrivals has pushed up hotel room rates, ensuring a continuation of the income growth achieved by hotel operators last year.
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In addition, 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 recorded between 2013 and 2023.
The survey also found that REITs had the highest net buying intentions at 22%, a sharp increase from the -13% recorded in last year’s survey. Institutional investors and property funds followed closely with 12% and 10% net buying intentions respectively. CBRE also noted that private equity and real estate funds for hotels are expected to continue their momentum from 2024 into this year.
However, private investors and high-net-worth individuals are expected to drive fewer hotel acquisitions this year. After two years of being the most active buyer type in the region, private investors indicated a greater level of selling activity in 2025 as they look to capitalise on improving market sentiment after acquiring assets during a period of price dislocation.
In terms of investment strategy for 2025, survey respondents favoured a value-add approach. CBRE observed that in select markets, assets have been repriced to the point where investors believe they can achieve value-add returns by acquiring assets that have a low risk profile.
This has led to the upscale and upper midscale hotel categories being voted as the most attractive asset types for investment this year, overtaking the upper upscale category that topped last year’s survey. The report attributes this shift to the operational flexibility and greater scope for value-added opportunities offered by this segment, such as redevelopment, adaptive reuse and rebranding of existing properties, which are cheaper alternatives to new developments.
The preference for this segment is also due to the leaner labour pool compared to higher-tier assets, resulting in reduced labour and cost pressures. Amid this shift, investors are also turning to long-stay or hybrid hospitality models. CBRE cites the growing appetite among investors to convert assets into co-living spaces as an example of this trend. This momentum is expected to gain traction in countries like Japan, Hong Kong and Singapore, where there is demand for cost-effective accommodation in relatively inflexible rental markets.
Other emerging trends include a greater preference for assets with vacant possession at the time of acquisition, which offers flexibility in terms of operator selection and refurbishment works. Limited-service hotels also saw a higher level of interest from respondents as investors remain focused on minimising operational costs.
Tokyo retained its position as the preferred city among hotel investors, thanks to low interest rates and stable income streams generated by hotel properties. Osaka also made it to the top five cities, for similar reasons. Singapore and Sydney also ranked among the top cities, with solid hotel fundamentals such as growth in daily rates and underlying operating profits. Seoul also stood out, with more visitors from mainland China driving daily rates in recent years, leading to an uptick in investor activity.
Overall, the CBRE survey shows that the APAC hotel sector is expected to continue seeing strong investment activity in 2025, driven by a rebound in tourist arrivals, limited hotel supply, and a shift towards the upscale and upper midscale segment.