A recent survey conducted by CBRE has revealed that the Asia Pacific (Apac) hotel sector is likely to see strong investment activity continue into 2025. According to the survey, which was carried out in November and December of last year, 72% of hotel investors plan to purchase more hotel assets this year.
The survey also found that nearly half of the respondents (45%) intend to increase their purchasing volume by more than 10% in 2025. CBRE’s head of hotels, capital markets for Asia Pacific, Steve Carroll, believes that this is due to optimistic pricing expectations for hotel and living assets in the region.
One of the key factors driving the healthy buying intentions is the rebound in tourist arrivals, particularly in countries like Japan, Singapore, and Australia. This has led to a rise in hotel room rates, resulting in continued income growth for hotel operators.
In addition, investors are also encouraged by the limited hotel supply in Apac. According to data from hospitality data intelligence group STR, the hotel supply pipeline in the region is expected to grow at a CAGR of only 2.2% between 2024 and 2028, compared to a CAGR of 5% between 2013 and 2023.
A breakdown of investment intentions by investor type found that REITs (real estate investment trusts) had the highest net buying intentions at 22%. This is a significant improvement from the -13% recorded in last year’s survey. CBRE notes that REITs had been in a negative investment mode for several years but are now looking to acquire more assets in 2025.
Institutional investors and property funds also registered high net buying intentions at 12% and 10%, respectively. According to CBRE, this is due to the increasing activity of private equity and real estate funds in the hotel sector, which is expected to continue this year.
On the other hand, private investors and high-net-worth individuals are expected to drive fewer hotel acquisitions in 2025. After being the most active buyers in the region for two years, private investors are now anticipating a higher level of selling activity as they look to capitalize on the improving market sentiment.
The survey also found that upscale and upper midscale hotel assets are expected to be the most attractive for investment this year, surpassing the upper upscale category which was the top choice in last year’s survey. According to CBRE, investors see value-add opportunities in these segments through strategies like redevelopment, adaptive reuse, and rebranding of existing properties.
Aside from these trends, investors are also interested in long-stay or hybrid hospitality models. CBRE cites the growing appetite for converting assets into co-living spaces, particularly in markets like Japan, Hong Kong, and Singapore, where there is high demand for cost-effective accommodation.
Other emerging trends include a preference for assets with vacant possession at the time of acquisition, allowing for more flexibility in terms of operator selection and renovation works. Limited-service hotels have also seen increased interest from investors, as they focus on minimizing operational costs.
Among the top cities for hotel investment, Tokyo remains in the lead due to low interest rates and stable income streams from hotel properties. Osaka also ranks among the top five cities for similar reasons. Singapore and Sydney also make the list, thanks to solid hotel fundamentals and growth in daily rates and operating profits. Seoul has also seen a rise in investor activity, driven by an increase in Chinese visitors and daily rates.
In summary, the CBRE survey highlights the positive outlook for hotel investment in the Asia Pacific region in 2025, driven by factors such as rebounding tourist arrivals, limited supply, and shifting investor preferences towards value-add opportunities and alternative hospitality models.
The prime location of Singapore, coupled with its robust economy, makes it a desirable destination for real estate investors. Boasting a strategic position as a global business hub, the demand for properties here remains consistently strong. This has resulted in a steady rise in property prices over the years, particularly for condos in prime areas. For savvy investors who enter the market at the opportune moment and hold onto their properties for the long haul, there is great potential for significant capital appreciation. Keep an eye on new condo launches for more opportunities to invest in the Singapore condo market.