Hospitality Investors Shift Focus to Asia-Pacific and Gulf Markets

Capital Shifts Toward Asia and the Gulf

Global capital is being repositioned toward Asia-Pacific and Gulf markets, according to speakers at the IHIF Asia conference. The discussion, chaired by Marcena Capital chief executive Dhruv Sharma, included Global Asset Solutions chief investment officer Robert Walters and Sheikh Saqer bin Omar Al Qasimi.

Walters said the shift was driven by investors seeking diversification, market scale and durable returns. He said the trend should not be interpreted as a withdrawal from Europe, where investment volumes remained broadly stable at about 25 billion euros in 2025.

Investors were responding to supply constraints and continued growth in visitor arrivals across parts of Northeast and Southeast Asia. Arrival numbers in some markets had risen by about 20% to 22%, supporting demand for hospitality assets.

Japan, China, South Korea, Singapore and Australia were identified as gateway markets that continue to attract overseas capital. However, yield compression in high-profile assets was leading some investors to consider secondary markets, including Thailand, Vietnam and Indonesia.

Local Partnerships and Governance

Investment in emerging and secondary markets requires a detailed understanding of local conditions. Investors should work with local and regional partners who can navigate differences in regulation, land ownership, operating practices and market demand.

Governance is an important part of cross-border investment arrangements. Investors and local operators should agree in advance on “reserved matters,” including capital expenditure, refinancing decisions and potential brand changes. Disagreements over these issues can create conflict when partnership terms are unclear.

Singapore was cited as a preferred legal jurisdiction for some governance contracts because of its established legal framework. Investors and local partners also need clear terms of reference from the start of a transaction.

Vietnam was discussed as a market with investment potential and operational complexity. The country offered demand growth but presented challenges involving land use, title issues and governance. First-time investors would need experienced local partners with relevant government and market connections.

Ras Al Khaimah Development Strategy

Sheikh Saqer described Ras Al Khaimah’s approach to attracting international capital through large-scale destination planning. He highlighted Marjan Island, Marjan Beach and RAK Central as projects intended to create investable tourism and residential destinations.

Marjan operates as a master developer rather than directly competing with private developers. In some cases, Marjan commits its own capital early in a project to demonstrate support and encourage additional private investment.

Foreign investors account for 78% of Marjan’s current investor base. Sheikh Saqer identified the $5.7 billion Wynn Marjan Island development, scheduled for completion in September 2027, as an important project for the emirate.

Developers purchasing land without formal partnership agreements were still regarded as long-term participants in building a consistent destination identity. Sheikh Saqer also warned against project structures that prioritize short-term value while leaving little cash-flow capacity to manage market disruptions.

For Marjan projects, expected yields were about 18% for hospitality investments and more than 30% for residential transactions.

Environmental Standards and Investment Costs

ESG considerations are becoming more relevant in hotel investment decisions. Cushman & Wakefield research indicated that environmental compliance could add about 5% to an asset’s value.

However, construction costs remain a concern for many investors. Around two-thirds of investors were hesitant to undertake certain upgrades or seek environmental certifications, such as BREEAM, because of the cost implications.

Regional Markets Show Differing Conditions

Global Asset Solutions’ Asia-Pacific Hotels Transactions and Market Outlook identified Vietnam and South Korea as markets with notable hospitality growth prospects in 2026.

Vietnam is benefiting from growth across several demand measures and its position as a comparatively affordable destination. However, a substantial pipeline of hotel developments could moderate growth from 2027.

South Korea has recorded sustained growth in room rates, while new hotel supply in Seoul and nearby markets remains more limited. India was also identified as a market supported by economic growth, with hotel pricing expected to remain resilient through 2026 and 2027 despite new investment and brand expansion.

Singapore and Australia continue to attract investors because of their relative stability and consistent profitability. In Australia, however, new supply is beginning to affect conditions in individual markets.

Thailand was described as returning to growth after several weaker quarters. Older upscale hotels in Bangkok may face pressure as new properties enter the market. Malaysia’s outlook was more restrained, with rate growth expected to flatten for the rest of the year.

Japan and China Follow Different Cycles

Japan and China were described as being at different stages of the hospitality cycle. Japan is increasingly focused on revenue and profit optimization, with four out of five submarkets recording growth in both occupancy and average daily rate.

A more balanced mix of domestic and international guests has helped reduce seasonal fluctuations in Japan. The market still needs more high-end hotel supply.

China’s recovery has been slower. Only one in five submarkets recorded growth, while about two-thirds experienced negative occupancy growth. Revenue per available room growth was expected to reach about 1% to 1.5% in 2026.

New supply, discounting and reduced spending by government bodies and state-owned enterprises are limiting hotel pricing power in China. Chengdu is facing new room supply equal to roughly 14% to 15% of its existing stock. High-end hotels in Beijing also continue to face profitability pressure.

Shanghai, Guangzhou and Shenzhen are expected to record relatively modest growth, estimated at about 1% to 2%, through the end of the decade.

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