The hotel industry in the Asia Pacific (Apac) region is expected to see strong investment activity in 2025, according to a recent CBRE survey. The survey found that over 72% of hotel investors plan to increase their purchasing volume this year, with 45% aiming to increase it by more than 10%.
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Steve Carroll, head of hotels, capital markets, Asia Pacific at CBRE, attributes this optimism to the rebound in tourist arrivals, especially in Japan, Singapore, and Australia. This increase in international arrivals has led to higher room rates and income growth for hotel operators, driving investors’ interest in the market.
Another factor driving investment intentions is the limited supply of hotels in the Apac region. According to CBRE, the hotel supply pipeline is expected to grow at a CAGR of 2.2% between 2024 and 2028, which is significantly lower than the 5% CAGR seen between 2013 and 2023.
The survey also found that REITs had the highest net buying intentions at 22%, followed by institutional investors at 12% and property funds at 10%. Private equity and real estate funds are also expected to remain active in the market.
However, private investors and high-net-worth individuals are expected to drive fewer hotel acquisitions in 2025, as they look to capitalize on the improving market sentiment by selling assets they acquired during a period of price dislocation.
In terms of investment strategy, respondents favored a value-add approach, with upscale and upper midscale assets being the most attractive categories for investment this year. This is a shift from last year’s survey, where the upper upscale category was the preferred asset type. CBRE attributes this change to the upscale and upper midscale segment’s greater operational flexibility and opportunities for value creation through redevelopment, adaptive reuse, and rebranding.
Investors are also increasingly interested in long-stay or hybrid hospitality models, such as co-living spaces, in markets like Japan, Hong Kong, and Singapore. This is driven by demand for cost-effective accommodation in these cities with inflexible rental markets.
Other emerging trends highlighted by the survey include a preference for assets with vacant possession at the time of acquisition, a focus on limited-service hotels to minimize operational costs, and a strong interest in cities like Tokyo, Osaka, Singapore, Sydney, and Seoul.