Apac Investors Signal Intent Buy More Hotel Assets 2025 Cbre
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The Asia Pacific (APAC) hotel sector is expected to continue experiencing strong levels of investment activity in 2025, according to a recent CBRE survey. The 2025 Asia Pacific Hotel Investor Intentions Survey reveals that over 72% of hotel investors surveyed in November and December last year intend to purchase more hotel assets this year.
Of this number, around 45% plan to increase their purchasing volume by more than 10%. “Investors are optimistic about the pricing expectations for hotel and living assets in APAC in 2025, following a strong performance over the past 18 months,” says Steve Carroll, Head of Hotels, Capital Markets, Asia Pacific, CBRE.
The survey found that the healthy buying intentions are supported by a rebound in tourist arrivals, particularly in countries such as Japan, Singapore, and Australia. This has resulted in an increase in hotel room rates, leading to income growth for hotel operators.
Furthermore, investors are encouraged by the limited hotel supply in APAC. According to hospitality data intelligence group STR, the hotel supply pipeline in APAC is projected to grow at a CAGR of 2.2% between 2024 and 2028, significantly lower than the 5% CAGR recorded between 2013 and 2023.
In terms of investor type, real estate investment trusts (REITs) have the highest net buying intentions at 22%, a significant improvement from the -13% recorded in the previous year’s survey. “After a few years of negative investment intentions, REITs are now looking to purchase more assets in 2025,” the report states.
Institutional investors have 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 become more active in 2024 and are expected to continue this trend this year.
However, private investors and high-net-worth individuals are expected to be less active in hotel acquisitions this year. They have been the most active buyer type in the region for the past two years but are now looking to sell assets and capitalize on the improving market sentiment after acquiring assets at lower prices.
The survey also reveals that investors are targeting upscale and upper midscale assets and favor a value-add investment strategy for 2025. CBRE notes that in some markets, assets have been repriced to a point where investors see potential for value-add returns by acquiring properties with core risk profiles.
As a result, the upscale and upper midscale categories were voted the most attractive asset types for investment this year, overtaking the upper upscale category that topped the previous year’s survey. This shift is attributed to the operational flexibility and value-added opportunities offered by the upscale and upper midscale segments, such as redevelopment, adaptive reuse, and rebranding of existing properties, which are more cost-effective alternatives to new developments.
Another emerging trend is the growing preference for long-stay or hybrid hospitality models. The report cites a rising appetite for converting assets into co-living spaces among investors. This trend is expected to gain momentum in countries like Japan, Hong Kong, and Singapore, where there is a demand for affordable accommodation in relatively rigid rental markets.
Additionally, investors now prefer assets with vacant possession upon acquisition. This provides flexibility in terms of operator selection and refurbishment works. Limited-service hotels have also garnered more interest from investors as they focus on minimizing operational costs.
Tokyo remains the top city for hotel investors, thanks to its low-interest rates and stable income streams generated by hotel properties. Osaka also makes it to the top five cities for similar reasons. Singapore and Sydney are also among the top cities, with solid hotel fundamentals, including growth in daily rates and underlying operating profits. Seoul stands out, with a rise in visitors from mainland China, leading to an increase in daily rates and investor activity in recent months.