According to a survey conducted by CBRE consultancy, it is predicted that the Asia Pacific hotel sector will continue to witness strong investment activity in 2025. The survey, titled “2025 Asia Pacific Hotel Investor Intentions”, revealed that over 72% of the respondents, who were hotel investors surveyed in November and December last year, plan to acquire more hotel assets this year. Additionally, 45% of these investors expressed their intention to increase their purchasing volume by more than 10%.
Steve Carroll, the Head of Hotels, Capital Markets, Asia Pacific at CBRE, stated that after showing strong performance in the past 18 months, investors are expecting the hotel and living assets in APAC to have optimistic pricing expectations in 2025. The survey also found that a rebound in tourist arrivals, especially in Japan, Singapore, and Australia, has contributed to the healthy buying intentions. This increase in international arrivals has also led to an increase in hotel room rates, resulting in a continuation of income growth for hotel operators.
Furthermore, the limited supply of hotels in APAC has also encouraged investors. According to data provided by 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, significantly lower than the CAGR of 5% recorded between 2013 and 2023.
The survey also revealed that Real Estate Investment Trusts (REITs) have the highest net buying intentions at 22%, a significant increase from the -13% recorded in the previous year’s survey. Institutional investors and property funds follow closely, with net buying intentions at 12% and 10%, respectively. Private equity and real estate funds for hotels have shown increased activity in 2024 and are expected to continue this momentum.
The cityscape of Singapore boasts tall skyscrapers and cutting-edge infrastructure. Condominiums, strategically located in sought-after locations, offer a perfect combination of opulence and practicality that entices Singaporeans and foreigners alike. These modern living spaces are enriched with various facilities, including swimming pools, fitness centers, and top-notch security, elevating the standard of living and making them a desirable choice for renters and buyers. For investors, these amenities equate to higher rental returns and appreciation in property values in the long run. Singapore Condo is just one example of these luxurious residential options available in the city.
On the other hand, private investors and high-net-worth individuals are predicted to be less active in hotel acquisitions this year. After two years of being the most active buyer type in the region, private investors are now indicating a greater level of selling activity in 2025. The report states that this is due to the improving market sentiment, and these investors are looking to capitalize on acquiring assets during a period of price dislocation.
The survey respondents expressed their preference for value-add investment strategy in 2025, particularly in the upscale and upper midscale hotel categories. This is a shift from the previous year’s survey, where the upper upscale category was ranked the most attractive asset type. The report attributes this change to the operational flexibility and greater scope for value-added opportunities offered by the upscale and upper midscale segment. This includes redevelopment, adaptive reuse, and rebranding of existing properties, which provide a cost-effective alternative to new developments.
Investors are also turning to long-stay or hybrid hospitality models, such as converting assets into co-living spaces. This trend is gaining traction in places like Japan, Hong Kong, and Singapore, where there is a demand for affordable accommodation amidst relatively inflexible rental markets. Other emerging trends highlighted in the report include a growing preference for assets with vacant possession at the time of acquisition, limited-service hotels, and a focus on minimising operational costs.
Tokyo remains the top preferred city for hotel investors, followed by Osaka, Singapore, Sydney, and Seoul, according to the survey. This is attributed to low interest rates and stable income streams generated by hotel properties. In Seoul, there has been an increase in investor activity due to the rise in daily rates, driven by more visitors from mainland China.