#Japan #Investment #Tokyo #JLL #hospitality

Asia-Pacific Hotel Investment Trends in 2025

The recent analysis by JLL, a leading global real estate services firm, unveiled intriguing insights into the hotel investment landscape in the Asia-Pacific region for the first half of 2025. Despite maintaining a robust investment environment, the overall hotel investments in this area have hit $4.7 billion, marking a noticeable 23% decline compared to the previous year. This downturn can be largely attributed to global macroeconomic uncertainties affecting investor sentiment and their subsequent cautious approach.

Major Markets and Investment Breakdown

The large investments were concentrated in five key markets: Japan, Greater China, Australia, Singapore, and South Korea, which collectively accounted for a staggering 84% of total investments. Japan emerged as the leader, contributing $1.5 billion, followed by Greater China at approximately $744 million, Australia at $664 million, Singapore at $546 million, and South Korea at $540 million. Other markets combined for only $758 million or 16% of the total.

This year, investors have adopted a more selective strategy due to various competitive factors in the market. The widening bid-ask spread between buyers and sellers, coupled with prolonged due diligence periods, has become evident. According to Nihat Ercan, CEO of JLL Hotels & Hospitality Group in Asia Pacific, the current environment signals a restructuring of funding sources in the hotel investment sector, illustrating a cautious phase in investment behaviors.

Impact of Private Equity and High Net-Worth Individuals

Interestingly, private equity funds have notably increased their investments in hospitality assets, with a remarkable 6% year-on-year rise. This trend is indicative of their strategies to capitalize on pricing disruptions within key gateway markets, looking for attractive bargains amidst the fluctuations. Moreover, high-net-worth individuals (HNWIs) have been actively seeking portfolio diversification via hotel investments, showing impressive growth of about 54% in their investment amounts compared to the previous year.

Strengthened Fundamentals for Long-Term Growth

The tourism fundamentals in the Asia-Pacific region are projected to remain strong long-term. Notably, the number of international tourists in Q1 2025 saw a 7% increase from the previous year, boosting RevPAR (Revenue Per Available Room) growth, which positively impacted investor sentiment within the hotel sector.

While overall performance exhibited variations across key gateway markets, cities like Tokyo posted occupancy rates exceeding 80%, alongside average daily rates (ADR) surpassing pre-pandemic levels. Singapore also maintained its ADR above 2019 levels, while Sydney demonstrated a robust occupancy rate nearing 80%.

Projections for Hotel Investments in 2025

JLL forecasts that the total hotel investment figure for the Asia-Pacific region could reach $12.8 billion in 2025, representing a 5% increase compared to the prior year. An acceleration in investment activity is expected later in the year as numerous transactions currently in due diligence phases come to fruition.

Traditional key markets such as Japan, Australia, Greater China, Singapore, and South Korea are expected to sustain high liquidity. Furthermore, emerging markets like Vietnam are poised to benefit from robust tourism demand, illustrating the resilience of the sector amidst changing dynamics.

Strategic Opportunities Ahead

As Nihat Ercan suggests, the latter half of 2025 is poised to present attractive opportunities for strategic investors looking into active operations. Regional hotel operators collaborating with private equity funds and family offices will emerge as the most proactive investors, concentrating on maximizing value for assets that necessitate specialized management expertise.

Yukio Abe James, Managing Director of JLL’s Hotels & Hospitality Division in Japan, emphasized the vibrancy of the Japanese hotel investment market, underpinned by an influx of foreign tourists and the yen's depreciation. This environment not only feeds the demand for hotel investments but also positions such assets as a hedge against inflation. The sustained lending liquidity from Japanese financial institutions coupled with low-interest rates has cemented the hospitality sector's appeal to both domestic and international investors.

About JLL

JLL (NYSE: JLL) is a global real estate services firm providing a wide array of services related to property, including leasing, selling, investing, constructing, and managing various types of real estate. With operations in 80 countries and a workforce of around 112,000, JLL is committed to shaping the future of real estate for a better world, driven by its mission to lead clients, employees, communities, and the globe toward a brighter future. Visit jll.com for more details.