Investment activity in Asia Pacific hotels reached US$8 billion, a 21% year-on-year rise, according to the latest CBRE outlook.
The first half of the year was led by Japan, Mainland China and Korea, which together accounted for the bulk of the transactions.
In Mainland China, hotel deal volume doubled from the previous year, helped by the extension of C-REIT eligibility to assets rated four-star and above.
Japan attracted both domestic investors and cross-border capital, while Korea benefited from solid operating fundamentals and a surge in international visitor demand.
“Hotels have become one of the most compelling real estate investment sectors in Asia Pacific,” Steve Carroll, CBRE’s Head of Hotels and Hospitality Asia Pacific, said. “Strong travel demand and limited new supply are supporting both operating performance and asset values. While higher borrowing costs may moderate investment activity in some markets during the second half of the year, investor interest remains concentrated in markets with strong growth and positive supply-demand fundamentals.”
Average daily rates approached historic highs across most markets, pushing revenue per available room upward.
Occupancy levels stayed below pre-pandemic averages region-wide, prompting operators to prioritize rate growth. Korea and Vietnam stood out, surpassing pre-COVID occupancy as travel demand intensified.
Tourist activity continued its rebound despite long-haul flight routes being disrupted by the Middle East conflict. Both Korea and Vietnam recorded strong visitor arrivals from within the region and Europe.
Limited new supply remains a defining characteristic, with raised construction costs curbing development.
Excluding Mainland China, the region is projected to grow about 1% annually between 2025 and 2029, while China alone is set to supply nearly half of all new hotel rooms.
Investors are increasingly pursuing value-add opportunities, especially in Hong Kong SAR, where hotels are being bought for conversion into student housing and other living-sector uses.
“As a result, investors are looking to unlock value through repositioning and conversion strategies rather than ground-up development. With new supply expected to remain limited in many markets, existing hotel assets are well positioned to benefit from sustained demand growth and improving operating performance.”
