According to a recent survey by CBRE, the Asia Pacific (Apac) hotel sector is expected to continue seeing a strong wave of investment activity in 2025. The 2025 Asia Pacific Hotel Investor Intentions Survey revealed that over 72% of hotel investors surveyed in November and December last year are planning to purchase more hotel assets this year.
Out of the respondents, 45% indicated that they are looking to increase their purchasing volume by more than 10% in 2025. Steve Carroll, head of hotels, capital markets, Asia Pacific, CBRE, stated that due to the resilient performance of the sector over the past 18 months, investors are optimistic about the pricing expectations for hotel and living assets in Apac in 2025.
The survey also found that the rebound in tourist arrivals, particularly in Japan, Singapore, and Australia, has contributed to the healthy buying intentions. This has led to an increase in room rates, resulting in continued income growth for hotel operators.
Moreover, investors are also encouraged by the limited hotel supply in Apac. Based on data from hospitality data intelligence group STR, CBRE highlights that the hotel supply pipeline in the region is expected to grow at a CAGR of 2.2% between 2024 and 2028, significantly lower than the 5% CAGR seen between 2013 and 2023.
When examining the investment intentions by investor type, the survey revealed that REITs had the highest net buying intentions at 22%, which is a sharp contrast from the -13% recorded in the previous year’s survey. According to the report, this marks a significant shift as REITs have been in a net negative investment position for the past few years.
Institutional investors had the second-highest net buying intentions at 12%, followed closely by property funds at 10%. CBRE notes that private equity and real estate funds for hotels have been more active in 2024 and this momentum is expected to continue in 2025.
However, private investors and high-net-worth individuals are likely to acquire fewer hotel assets this year. The report explains that after being the most active buyer type in the region for the past two years, private investors are now expecting a higher level of selling activity in 2025 as they look to capitalize on improving market sentiment after acquiring assets at a discounted price.
In terms of investment strategy, survey respondents favored a value-add approach for 2025. CBRE notes that in certain markets, assets have been repriced to the point where investors believe they can achieve value-add returns by acquiring assets that have a core risk profile.
As a result, the upscale and upper midscale hotel categories were chosen as the most attractive assets for investment this year, surpassing the upper upscale category that ranked first in last year’s survey. The report credits this shift to the operational flexibility and higher potential for value-added opportunities in the upscale and upper midscale segment, such as redevelopment, adaptive reuse, and rebranding of existing properties, which are more cost-effective alternatives to new developments.
Investors are also increasingly interested in long-stay or hybrid hospitality models, with a growing appetite for converting assets into co-living spaces. This trend is expected to gain 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 preference for assets with vacant possession at the time of acquisition, allowing flexibility in terms of operator selection and refurbishment works. Limited-service hotels have also gained more interest from respondents, as investors focus on minimizing operational costs.
The survey also highlighted the top cities for hotel investment in 2025, with Tokyo retaining its top position due to low interest rates and stable income streams from hotel properties. Osaka also made it to the top five cities for similar reasons. Singapore and Sydney were also among the top cities, with CBRE citing solid hotel fundamentals, such as growth in daily rates and underlying operating profits. Seoul also stood out, with an increase in visitors from mainland China driving daily rates and attracting more investor activity in recent months.