Activity this year has been strongest in Japan and Australia, which look set to “take back its rightful seats” as the most active markets before the pandemic, according to Li, albeit for different reasons.

“Deal activity in Japan continues to be supported by favorable interest rates and deep capital markets,” says Li. “Meanwhile, the high interest rates in Australia could pressure owners into selling their assets to release capital to reduce their leverage.”

In the first half of 2023, both markets outperformed the rest of Asia Pacific, with Japan and Australia/New Zealand recording $1.54 billion and $820 million in deals respectively, JLL data shows.

The recovery — and emergence — of certain segments could further buoy trading performance in the hotels sector. Among the bright spots are assets in the luxury, resorts, and co-living segments, all of which have proven resilient since the pandemic, says Li.

“For instance, resort destinations have traditionally been a niche product, but its strong yield and growth performance are especially appealing to investors now,” Li says.

A prime example is Phuket, where average room rates in January surged 50% relative to 2019 levels to reach THB 9,000 ($264), according to JLL.

“We expect to see more specific opportunities emerge in some destinations across Asia Pacific, where prices have been adjusted downwards, enabling interested parties to reconsider,” says Ercan.

“Investors remain very committed to the Asia Pacific hospitality sector and we see ongoing appetite among buyers to invest in key markets and strategic assets, with the ability to deploy capital.”