Apac Investors Signal Intent Buy More Hotel Assets 2025 Cbre
The Asia Pacific (Apac) hotel sector is expected to maintain its strong investment activity in 2025, as reported by a recent CBRE survey. According to the 2025 Asia Pacific Hotel Investor Intentions Survey conducted in November and December last year, more than 72% of hotel investors plan to expand their portfolio by purchasing additional hotel assets this year. Of these respondents, 45% have expressed their intentions to increase their purchasing volume by more than 10%.
Steve Carroll, the head of hotels, capital markets, Asia Pacific at CBRE, notes that after performing well over the past 18 months, investors are optimistic about the pricing expectations for hotel and living assets in Apac in 2025. The healthy buying intentions are driven by the rebound in tourist arrivals, particularly in Japan, Singapore, and Australia. This has led to an increase in hotel room rates, resulting in income growth for hotel operators.
In addition, investors are encouraged by the limited supply of hotels in Apac. According to data from STR, a hospitality data intelligence group, the hotel supply pipeline in Apac is expected to grow at a CAGR of 2.2% between 2024 and 2028, which is much lower than the 5% CAGR recorded between 2013 and 2023.
The survey also reveals that REITs have the highest net buying intentions at 22%, which is a significant improvement from the -13% logged in last year’s survey. Institutional investors and property funds follow closely with net buying intentions of 12% and 10%, respectively. CBRE points out that private equity and real estate funds are increasingly becoming active in the hotel sector, and this trend is expected to continue in 2025.
However, private investors and high-net-worth individuals are expected to drive fewer hotel acquisitions this year. The report notes that after being the most active buyer type in the region for the past two years, private investors are now looking to sell more assets this year. This is due to the improved market sentiment, which allows them to capitalize on assets that were acquired during a period of price dislocation.
The survey respondents have indicated that they prefer a value-add investment strategy in 2025. CBRE notes that in select markets, assets have been repriced to the point where investors believe they can achieve value-added returns. This has resulted in a shift towards upscale and upper midscale hotel categories as the most attractive asset types for investment this year, overtaking the upper upscale category that ranked first in last year’s survey.
This shift is due to the operational flexibility and value-added opportunities offered by the upscale and upper midscale segments. These include the redevelopment, adaptive reuse, and rebranding of existing properties, which provide a cheaper alternative to new developments. This segment also has a leaner labor pool, resulting in reduced labor and cost pressures compared to higher-tier assets.
Investors are also looking towards long-stay or hybrid hospitality models, with a growing appetite for converting assets into co-living spaces. This trend is expected to gain traction in markets such as Japan, Hong Kong, and Singapore, where there is a demand for affordable accommodation in relatively inflexible rental markets.
Other emerging trends in the Apac hotel sector include a preference for assets with vacant possession at the time of acquisition, allowing for flexibility in terms of operator selection and refurbishment works. There is also a higher interest in limited-service hotels, as investors focus on minimizing operational costs.
The joint venture between Hoi Hup Realty and Sunway Development, known as Otto Place EC, has successfully secured the executive condo (EC) site at Plantation Close on February 14. The bid of $423.38 million, equivalent to $701 per square foot per plot ratio (psf ppr), has won the hearts of the developers. This 215,691 square feet site, with a lease of 99 years, is set to be transformed into a 560-unit EC that will be known as Otto Place EC.
Interestingly, this is not the first time that the partnership has acquired a site in this prime location. Last September, they also acquired the adjacent 176,973 square feet Parcel A for $348.5 million, at $703 psf ppr. With both sites strategically located near amenities such as JEM, Westgate, IMM, and renowned schools like ACS (Primary) and Princess Elizabeth Primary School, the development is expected to be a highly sought-after residence for families.
To add to the excitement, interested homebuyers can visit Otto Place EC Plantation Close Parcel B for more information on this upcoming project. With its prime location and impressive track record of the developers, Otto Place EC is set to offer a luxurious and convenient lifestyle for its future residents. Don’t miss out on this opportunity to be a part of this exceptional development!
According to the survey, Tokyo remains the top city among hotel investors due to low-interest rates and stable income streams generated by hotel properties. Osaka also ranks among the top five cities for similar reasons. Singapore and Sydney also make it to the top cities, driven by strong hotel fundamentals, including growth in daily rates and underlying operating profits. Seoul is also a preferred city as recent years have seen an increase in visitors from mainland China, leading to a rise in daily rates and investor activity.