According to a survey conducted by CBRE, the Asia Pacific (Apac) hotel sector is expected to see robust investment activity in 2025. The consultancy’s 2025 Asia Pacific Hotel Investor Intentions Survey revealed that more than 72% of hotel investors surveyed in November and December last year plan to acquire more hotel assets this year. Nearly 45% of the respondents intend to increase their purchasing volume by more than 10%. Steve Carroll, Head of Hotels, Capital Markets, Asia Pacific at CBRE, said that investors are anticipating optimistic pricing expectations for hotel and living assets in Apac in 2025. The rebound in tourist arrivals, particularly in Japan, Singapore, and Australia, is a key factor driving this trend. Carroll added that the increase in international visitors from key markets has led to a rise in hotel room rates, ensuring continued income growth for hotel operators. Furthermore, the limited supply of hotels in the region is also encouraging investors. Data from hospitality data intelligence group STR shows that the hotel supply pipeline in Apac is expected to grow at a CAGR of 2.2% between 2024 and 2028, which is significantly lower than the 5% CAGR recorded between 2013 and 2023. The survey also found that REITs have the highest net buying intentions at 22%, up from -13% in last year’s survey. This is a sharp contrast, and the report suggests that REITs are expected to be active in buying assets this year after several years of negative intentions. Institutional investors and property funds closely followed with net buying intentions of 12% and 10%, respectively. Private equity and real estate funds are also expected to remain active this year, as they were in 2024. However, private investors and high-net-worth individuals may not drive as many hotel acquisitions this year as they have been over the past two years. The report notes that private investors are expected to sell more assets this year after acquiring properties during a period of price dislocation. The survey found that for 2025, the preferred investment strategy among respondents is value-add. CBRE notes that in select markets, assets have been repriced to a point where investors believe they can achieve value-add returns. As a result, the upscale and upper midscale hotel categories were voted the most attractive asset types, overtaking the upper upscale category, which topped last year’s survey. This shift is due to the operational flexibility and greater scope for value-added opportunities offered by the upscale and upper midscale segment. These include redevelopment, adaptive reuse, and rebranding of existing properties, which are a more cost-effective alternative to new developments. Furthermore, this segment has a leaner labor pool compared to higher-tier assets, reducing labor and cost pressures. The survey also showed a growing appetite among investors for long-stay or hybrid hospitality models. CBRE cites the growing trend of converting assets into co-living spaces, which is expected to continue gaining traction in places like Japan, Hong Kong, and Singapore, where there is demand for cost-effective accommodation in relatively inflexible rental markets. Other emerging trends include a preference for assets with vacant possession at the time of acquisition, which allows for flexibility in terms of operator selection and refurbishment works. The limited-service hotel segment also saw higher interest from respondents as investors remain focused on minimizing operational costs. Among the top cities, Tokyo retained its top position as the preferred city for hotel investors. The low-interest rates and stable income streams generated by hotel properties support its position. Osaka is another top choice due to similar reasons. Singapore and Sydney also ranked among the top cities, thanks to solid hotel fundamentals such as growth in daily rates and underlying operating profits. Seoul also stood out as Chinese visitors have driven up the daily rates, leading to an uptick in investor activity in recent months.