APAC Hotel Investment Fell 23% in H1, Full Year Recovery Expected: JLL

Trades of hotels in Asia Pacific fell to $4.7 billion in the first half of 2025, down 23 percent compared with the same period a year earlier, as growing uncertainty globally kept investors on the sidelines, according to JLL.

The largest declines in investment came in the region’s two largest markets – Japan and China – although these were countered by growth in Australia, Singapore and South Korea, according to a recent report by JLL.

The steepest drop followed the release of US president Donald Trump’s tariffs at the beginning of April with trades of Asia Pacific hotels sliding to $2.1 billion in the second quarter, down 44 percent from the same period last year.

“Investors have gravitated to safe haven markets, while decision-making timelines lengthened. At the same time, the bid ask spread between seller expectations and buyer valuations have also widened with sellers holding firm on price expectations and buyers applying greater scrutiny, leading to extended due diligence periods on both sides of transactions,” said JLL.

Capital Reallocation

JLL analysts attributed this year’s decline, in part, to an unusually high level of activity in 2024, when there were major transactions in Japan, Korea and other markets during the first half.

“Coming off a high base last year, the level of investment moderation is indicative of a more cautious investment market whereby a realignment of capital sources in the hotel investment landscape is occurring,” said Nihat Ercan, chief executive of JLL’s Asia Pacific hotels and hospitality group.

While the Japan market failed to reach the levels seen in the first six months of 2024, when there were major acquisitions by Blackstone, AXA IM and other players, Asia’s second-largest economy still led the region during the January through June period with $1.5 billion in hotel deals, according to JLL. 

With fewer large transactions recorded in the first half, that Japan deal volume was down nearly 50 percent from a year earlier, JLL said. 

China, which ranked second among markets in the region during the period, saw deals fall by half to $744 million in value due to fewer sales of distressed assets, coupled with headwinds including the economic slowdown and tariff uncertainty.

With offshore investors targeting the market, Australia bounced back with $664 million in hotel deals in the first half, with overseas buyers accounting for 45 percent of acquisitions during the period.

Singapore soared to $546 million in hotel deals in the first half, as sales of boutique hotels to high net worth individuals fuelled the market.

Among Singapore’s tycoon-driven deals in the first half of the year, Lotus One Investment, a private company controlled by Nepali tycoon Chandra P Khetan, in May picked up a 49-key shophouse hotel in the Tanjong Pagar area for S$80 million ($61.8 million).

That deal came after Indonesian-born billionaire Leo KoGuan in April acquired the 48-key shophouse hotel 21 Carpenter in the Boat Quay area from local player 8M Real Estate for S$100 million.

Rebound Expected

While deal levels in the first half of 2025 failed to match pace with a year earlier, JLL expressed confidence in a recovery in the final months of the year, with the consultancy predicting that hotel transaction volume across APAC will reach $12.8 billion by the end of December, representing about a 5 percent increase from last year.

“This forecast anticipates accelerated investment activity in the second half of the year as a backlog of deals in due diligence are expected to settle,” noted JLL.

In addition to the transactions in progress, JLL saw positive industry indicators with revenue per available room growing across APAC in the first half as international visitor arrivals showed signs of surpassing pre-pandemic levels region-wide.

“This performance improvement has bolstered investor confidence in the sector’s recovery trajectory,” JLL said.