Japan leads regional dealmaking as investors target upper-upscale hotels
Hotel investment across Asia-Pacific accelerated through the first nine months of 2026, with transaction volumes climbing 50% year over year to $12 billion. This prompted JLL to raise its full-year forecast to $15 billion as resilient hotel operating performance and sustained investor demand counter geopolitical and economic uncertainty.
The region’s year-to-date investment volume through September represents its strongest performance for the period since 2019, according to JLL’s new Hotel Investment Highlights Asia Pacific 2H 2026 report. The revised $15 billion projection exceeds the company’s earlier forecast of $13.3 billion and signals stronger-than-anticipated dealmaking across one of the world’s largest hospitality investment markets.
The outlook points to a market in which investors remain active but increasingly selective, prioritizing locations and assets with opportunities to improve operating performance, reposition properties and diversify exposure beyond established gateway cities.
“The Asia Pacific hotel investment market has clearly entered a new phase of maturity and conviction,” said Nihat Ercan, chief executive officer of Asia Pacific at JLL Hotels & Hospitality Group. He cited the strength of transaction volumes and increasing investor focus on regional cities, repositioning strategies and conversions to residential or other living uses.
Japan Dominates Regional Investment
Japan remained Asia-Pacific’s largest hotel investment market, attracting $4.7 billion in transactions through September, equivalent to 39% of the regional total. Mainland China ranked second with 15%, followed by Australia with 11%.
The concentration of capital in Japan underscores the market’s continued importance to regional hospitality investors, while activity across Australia, New Zealand and South Korea reflects the broader geographic reach of cross-border investment.
Private companies accounted for the largest share of transaction volume by investor type, representing 31% of activity. Investment managers and private equity funds contributed 19%, while listed companies accounted for 14%.
Domestic investors remained the most active source of capital overall. Cross-border investment nevertheless maintained a meaningful presence, particularly in Japan, Australia and New Zealand, and South Korea.
The figures suggest that the recovery in hotel investment is being supported by a combination of local capital, institutional participation and renewed international interest rather than reliance on a single investor category.
Hotel Fundamentals Support Investor Confidence
Operating performance has provided an important foundation for the investment rebound. Regional revenue per available room, or RevPAR, measured in U.S. dollars, increased 5% year over year between January and August 2026, supported by continued growth in average daily rates.
RevPAR measures room revenue relative to available room capacity and is a widely used indicator of hotel operating performance. Its growth can strengthen investor confidence in properties’ revenue-generating potential, although acquisition prices, financing costs and operating expenses remain important determinants of investment returns.
The combination of improving hotel revenues and continued capital availability has helped sustain transaction activity despite geopolitical tensions, macroeconomic uncertainty and volatility in interest rates.
JLL’s latest investor survey also points to continued appetite for hospitality assets. Its 2026-2027 Asia Pacific Hotel Investors’ Sentiment Survey, which polled 120 owners and investors in September, found that 88% of respondents intended to invest in 2026. That proportion was unchanged from 2025 and eight percentage points higher than in 2024.
Japan, South Korea, Australia, Singapore and India emerged as the five leading target markets. Traditional hotels remained the preferred investment category, favored by 88% of respondents, with particular interest in upper-upscale properties.
Investors Look Beyond Established Markets
Despite the stronger investment outlook, pricing expectations indicate that buyers remain cautious about the cost of capital and future asset valuations.
JLL reported that 58% of surveyed investors expected capitalization rates, or cap rates, to expand. Higher cap rates generally correspond to lower property valuations for a given level of net operating income, all else being equal.
That expectation is shaping investment strategies, with buyers increasingly seeking opportunities where operational improvements, redevelopment or repositioning could create value beyond market-wide appreciation.
Julien Naouri, head of investment sales for Asia at JLL Hotels & Hospitality Group, said the breadth of activity was as significant as the headline transaction volume, citing the return of institutional-grade deals, renewed cross-border investment and diversification into secondary markets and assets with repositioning potential.
For investors, the challenge is balancing competition for attractive properties against the possibility of higher capitalization rates and continued financing uncertainty. Assets with clear operational upside may offer opportunities to generate returns even where broader valuation growth is less certain.
JLL Forecasts $13.7 Billion in 2027 Transactions
Looking ahead, JLL expects Asia-Pacific hotel transaction volumes to reach approximately $13.7 billion in 2027 as investor confidence strengthens and transaction pipelines develop.
The projection would represent a moderation from the anticipated $15 billion in 2026, while still indicating a substantial level of investment activity by historical standards. It also suggests that the market’s next phase will depend on the conversion of investor interest and prospective deals into completed transactions.
Geopolitical risks and interest-rate volatility remain potential constraints. Nevertheless, JLL expects hotel operating fundamentals and the availability of investment opportunities across the region to continue supporting capital deployment.
“The fundamentals are holding firm, and capital is finding its way to opportunities across the region,” Ercan said.
For Asia-Pacific’s hotel sector, the combination of stronger trading performance, renewed institutional participation and expanding investment strategies is setting the stage for another active year in 2027, even as investors remain alert to valuation and financing risks.
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