Sydney Ranks Second in APAC Hotel Investment, Tapping into Strong Market Growth

Sydney

Sydney has solidified its position as the second most attractive city for hotel investment in the Asia Pacific (APAC) region, according to CBRE’s 2025 Asia Pacific Hotel Investor Intentions Survey. Only Tokyo surpasses Sydney in terms of investor interest, while Seoul and Bangkok are tied for third, and Singapore and Osaka share the fifth spot. The results reflect a significant rebound in tourism across the region, fueling investor confidence in hotel assets.

The surge in tourist arrivals, particularly from Japan, Singapore, and Australia, has driven a renewed interest in hotel investments, with many investors eager to capitalize on the limited supply of hotel rooms in the region. The survey revealed that over 72% of investors are planning to increase their hotel investment allocations across APAC in 2025, signaling a bullish outlook for the sector.

Steve Carroll, Head of Hotels, Capital Markets, Asia Pacific at CBRE, noted, “After performing strongly over the past 18 months, investors anticipate hotel and living assets in Asia Pacific to have the most optimistic pricing expectations in 2025.” Carroll highlighted the role of increased international arrivals in pushing up hotel room rates across the region, further solidifying the income growth that hotel operators have seen in the past year.

The findings of the survey, conducted in November and December 2024, also shed light on shifting investor preferences within the hotel sector. Following a period of strong activity in the luxury hotel market, investor focus has shifted toward the upscale and upper midscale segments. This shift aligns with a broader trend of investors seeking assets with strong potential for value growth, particularly through rebranding and redevelopment strategies.

Investors are also proceeding with caution when it comes to major investment decisions. With interest rate cuts underway in many major markets, there is a wait-and-see approach regarding the scope of future cuts, especially outside of Japan. Despite this, the appetite for hotel investments in key APAC markets, including Sydney, remains robust.

The survey also emphasized the importance of well-located, high-quality hotel assets, with these properties continuing to attract the most investor attention. This focus on prime locations comes as expectations for continued growth in mainland Chinese outbound tourism remain high. Additionally, there is optimism about further occupancy improvements, as well as increasing interest from institutional investors.

As the APAC hotel investment market continues to evolve, Sydney’s status as a leading destination for hotel investments is a testament to its appeal as both a business hub and a tourist hotspot. With ongoing growth in international tourism and an increase in investor confidence, Sydney is well-positioned to maintain its spot as a top hotel investment destination in the region.

The outlook for 2025 and beyond suggests that the APAC hotel market will continue to attract strong investor interest, especially in cities like Sydney that offer a combination of high-quality assets, strategic location, and a resilient tourism industry. As investors focus on value-add opportunities and the market adjusts to evolving conditions, Sydney is expected to remain a key player in the APAC hotel investment landscape.