Apac investors signal intent to buy more hotel assets in 2025: CBRE

/ EdgeProp Singapore |

February 24, 2025 4:01 PM SGT

According to a survey by CBRE, 72% of investors plan to increase their hotel asset allocations this year (Picture: Albert Chua/The Edge Singapore)

The Asia Pacific (Apac) hotel sector may continue to see robust investment activity in 2025, according to findings from a CBRE survey. The consultancy’s 2025 Asia Pacific Hotel Investor Intentions Survey found that over 72% of hotel investors surveyed last November and December plan to buy more hotel assets this year.

Around 45% of respondents indicated they are looking to increase their purchasing volume by more than 10% this year. “After performing strongly over the past 18 months, investors anticipate hotel and living assets in Apac to have the most optimistic pricing expectations in 2025,” says Steve Carroll, head of hotels, capital markets, Asia Pacific, CBRE.

The healthy buying intentions are underpinned by a rebound in tourist arrivals, particularly in places such as Japan, Singapore and Australia, the survey found. “The boost in international arrivals from key markets has pushed up Apac hotel room rates, ensuring a continuation of the income growth hotel operators achieved last year,” Carroll adds.

In addition, investors are encouraged by the largely limited hotel supply in Apac. Citing data by hospitality data intelligence group STR, CBRE points out that the hotel supply pipeline in Apac is set to grow at a CAGR of 2.2% between 2024 and 2028 — well below the 5% CAGR logged between 2013 and 2023.

A breakdown of investment intentions by investor type found that REITs had the highest net buying intentions at 22%. This marks a sharp contrast from the –13% logged in last year’s survey. “Following several years of net negative investment intentions, REITs indicated that they expect to be in buy mode in 2025,” the report reads.

Institutional investors registered 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 became more active in 2024 and the momentum is expected to continue 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 regionwide, private investors indicated they expect 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,” the report adds.

Targeting upscale and upper midscale assets

Survey respondents favoured a value-add investment strategy for 2025. CBRE observes that in select markets, assets have been repriced to the point where investors believe they can achieve value-add returns by acquiring assets that reflect core risk profiles.

Consequently, the upscale and upper midscale hotel categories were voted the most attractive asset type for investment this year, overtaking the upper upscale category that topped last year’s survey.

The report credits the shifting preference to the upscale and upper midscale segment’s operational flexibility and greater scope for value-added opportunities. These include redevelopment, adaptive reuse and rebranding of existing properties, which offer a cheaper alternative to new developments.

The segment also has a generally leaner labour pool compared to higher-tier assets, reducing labour and cost pressures.

Amid this shift, investors are also turning to long-stay or hybrid hospitality models. CBRE cites investors’ growing appetite for converting assets into co-living spaces as an example. This momentum is anticipated to continue gaining traction in places like Japan, Hong Kong and Singapore, where there is demand for cost-effective accommodation amid relatively inflexible rental markets.

Other emerging trends include a greater preference among investors for assets with vacant possession at the time of acquisition, allowing for flexibility in terms of operator selection and refurbishment works. Limited-service hotels also saw higher interest from respondents, as investors remain focused on minimising operational costs.

Tokyo retained its top position as the preferred city among hotel investors, supported by low interest rates and stable income streams generated by hotel properties. Osaka is also ranked among the top five cities for similar reasons.

Singapore and Sydney also ranked among the top cities, which CBRE attributes to solid hotel fundamentals, including growth in daily rates and underlying operating profits. Seoul also stood out, as more visitors from mainland China have driven daily rates in recent years, leading to an uptick in investor activity in recent months.