Australian Hotel Investment Review and Outlook 2025

The Australian hotel market is poised for a rebound in investment activity in 2025, driven by an improving interest rate environment, strong trading performance, and renewed interest from offshore investors. As Australia continues to attract both domestic and international visitors, the demand for quality hotel assets remains strong across key markets.

The following trends are anticipated to shape the market in the coming year:

1. Debt cost easing: Transaction volumes expected to rebound to around $2.2 billion, slightly above the long-term average, on the back of expected interest rate cuts and a reduction of the bid-ask spread.
   
   
2. Capital shift: Renewed focus from Asian investors pivoting back from other global markets like the UK, Europe and Japan.
   
   
3. Sydney leads the way: Sydney remains the leading investment destination, but Melbourne and Brisbane offer attractive value propositions.
   
   
4. FX advantages: Weak Australian dollar making real estate more appealing for foreign investors and supports a thesis that the market may see strong growth in domestic and inbound tourism as a consequence.
   
   
5. Value-add focus: Strong focus on value-add opportunities and existing assets with good fundamentals, driven by high replacement costs.

For more insights on recent investment trends, key investment themes for 2025 and shifting capital behaviours, please download a copy of the report.