Weak dollar, safe haven image attract investors to Australia

INTERNATIONAL REPORT — Reports cite strong spending power and a favorable trade position driving investment recovery in Australia, particularly as investors look to derisk their geographical exposure to the U.S. David Mansfield, managing director of The Ascott Ltd., Australasia, agrees.

“There’s certainly an uptick of investment from Asia into Australia at the moment. Given our cycle is at its lower end, and we can expect an upswing in the next three to five years, there is obvious value for those investors,” Mansfield said. “The savvy investor who has capital is looking at Australia for that upswing, and they’re getting in now, which can help offset the high-cost environment that exists in running businesses in Australia at the moment.”

The medium- to long-term outlook is very strong for Australia, added Mansfield, and his company is positioning itself accordingly.

David Mansfield

“We’re working with these investors to convert properties into other brands or develop other properties in line with that investment appetite,” he said.

The Ascott is working with many of the same developers from the Quest Apartment Hotels network to expand their other brands in Australia, Mansfield said.

“By leveraging those relationships and the unique market intelligence we’ve built over time, we’re driving stronger returns across our managed hotel portfolio, particularly through the growth of lyf and Oakwood,” he said.  

Some new data backs up Mansfield's assumptions.

Colliers Hotels Q1 Update 2025 report stated that transactions recorded a notable increase in Q1 to $676 million, double the volume recorded in the same period in 2024. Offshore capital accounted for 41% of hotel deal flow. “In a marked contrast to the last few years, Asian capital has become active again as the Australian dollar remains historically low,” the report said.

In CBRE’s latest Asia Pacific Hotel Investor Intentions Survey, Sydney claimed the second spot after Tokyo as the most popular city for hotel investment for the 72% of investors aiming to buy more hotel assets in Asia Pacific.

A safe, lucrative bet

Dr. Sabine Schaffer, co-founder of the Pro-invest Group and one of Australia’s largest independent hotel investors, agrees that Asian hoteliers see Australian hotels as “a safe bet” in terms of asset classes but also as a lucrative one.

Sabine Schaffer

“With the Australian dollar trading at a favorable level compared to a number of major currencies (including the SGD and USD), Australia offers a more attractive investment opportunity because assets can be acquired at a better price point,” she said. “We do see increased interest in the Australian market, in particular since the start of 2025.”

In addition, Dr. Schaffer said transactions, such as the InterContinental sale in Auckland, are coming in at record pricing.

“We have now entered a cycle of interest rate cuts, which will boost consumer spending and benefit the economy, including hospitality,” she said.

The ascendancy of the Asia Pacific region in global tourism – with a projected 10% growth in international visitor arrivals in the next few years and increasing flight connections – makes Australian hotels particularly attractive investments, Schaffer added.

The comeback of the most important source markets for Australian hospitality, notably Chinese travelers, will bring a significant upside to the industry.

Sabine Schaffer

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“The comeback of the most important source markets for Australian hospitality, notably Chinese travelers, will bring a significant upside to the industry,” she said.

Interest from Singapore

Schaffer believes Singaporean investors will be honing in on profitable long-term investment opportunities in Australian hotels.

Chayadi Karim, head of Singaporean family-owned Invictus Developments, said Australia is strongly a part of its plans to diversify its assets.

“Our investment in the Australian hotel market is underpinned by a combination of robust fundamentals and promising growth prospects,” he said.

Karim said Australia offers a stable economic environment, transparent legal frameworks and a resilient tourism industry that is experiencing a rebound in both domestic and international visitors post-COVID.

“Australia presents an appealing diversification opportunity within a familiar and well-regulated market, further enhanced by the current favorable exchange rate dynamics,” he said.

Last year, Invictus took on Sydney’s EVT Hotels & Resorts to manage its luxury Independent Collection under the Ode Hotels brand. Joining the portfolio soon is 39 York Street, an office-to-hotel conversion in Sydney’s Central Business District.

Chayadi Karim

Karim said Brisbane is also on the group’s radar.

“Brisbane, like Sydney, is benefiting from major infrastructure investments and a strong calendar of major events in the lead-up to the 2032 Olympics, driving consistent demand,” he said. “Looking ahead, our current Australian hotel portfolio’s growth strategy is focused on strategic acquisitions and the enhancement of existing assets. We aim to continue expanding our footprint in Sydney and Brisbane, which has shown good results due to strong demand and limited new supply.”

Rahul Ghai, managing director of Asia at Salter Brothers, said while transaction volumes are more selective, investor sentiment remains positive toward high-quality assets in prime locations.

“We’re seeing strong interest in value-add and repositioning opportunities, particularly in the luxury and lifestyle segments,” he said.

Asian investors jump back in

JLL’s Australian Hotel Investment Review and Outlook 2025 also predicts investment will continue to rebound in 2025 thanks to “renewed focus from Asian investors pivoting back from other global markets like the U.K., Europe and Japan.”

This follows “subdued” hotel investment volumes totaling $1.69 billion in 2024, a 34% year-over-year decrease and 23% below the 10-year long-term.

“There’s a strong focus on value-add opportunities and existing assets with good fundamentals, driven by high replacement costs,” the report said. And while Sydney leads the way for renewed Asian investor interest, Melbourne and Brisbane also “offer attractive value propositions.”

Fragrance Group’s interest in emerging markets reflects a broader trend we’re seeing – savvy investors recognizing the untapped potential in areas beyond the major east coast gateways. These locations represent strong value-creation opportunities, especially when paired with the right brand and operating partner.

Adrian Williams

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Further south, in Tasmania, investors also see value-added opportunities. Hilton is partnering with Singapore-based Fragrance Group to launch DoubleTree by Hilton, the group’s first hotel on the island state, which is scheduled to open in the second half of 2025. The 206-key property was initially planned as a Novotel.

Meanwhile, Fragrance Group is expanding its Australian portfolio through its partnership with Accor and Global Premium Hotels (owned by Fragrance’s chairman, Koh Wee Meng) – and the island state is a big focus of developments, said Accor Pacific COO Adrian Williams. (In October, Fragrance acquired another Hobart hotel for AUD$16 million.)

“Fragrance Group’s interest in emerging markets reflects a broader trend we’re seeing – savvy investors recognizing the untapped potential in areas beyond the major east coast gateways,” she said. “These locations represent strong value-creation opportunities, especially when paired with the right brand and operating partner.”

Williams said Accor is working with several “valued Asian partners” on other Australian hotel development and investment projects.

“We’re absolutely seeing growing momentum from Asian capital in the Australian hotel market, and it’s a trend we expect to continue,” she said. “Australia is viewed as a mature, highly stable, well-regulated and attractive tourism market with strong fundamentals and long-term growth potential – particularly as air capacity continues to rebound across Asia Pacific.”