Investment in Asia Pacific's hotel properties totaled $8.7 billion in 2013, the highest level since 2007, according to Savills.
Total investment sales increased 23.4 percent from the $7.1 billion reported in 2012.
"In Japan, Singapore and Australia, a large number of risk-averse investors are still focused on core markets and prime assets," Simon Smith, Savills Research, said in the report. "However, opportunistic investors are growing in number (and spending power), driving increased investment in countries such as Thailand, Viet Nam and Indonesia."
The Japanese hotel market accounted for $2.05 billion or 23.5 percent of all investment sales in 2013, Savills reports. Transaction volumes increased 34.9 percent from 2012.
With $1.96 billion, Singapore represented 22.4 percent of all investment sales last year, with transaction volumes increasing a whopping 415.6 percent year-over-year.
Fourth quarter investment transactions totaled $1.56 billion, increasing 88.2 percent from the prior year.
Three major transactions in 2013 provide good examples of investment market trends, according to Savills.
"The sale of a 31-hotel portfolio in Australia, with a total transaction volume of A$800 million ($721.9 million), to Abu Dhabi Investment Authority indicated that demand from overseas investors in Australia remains at an all-time high; the record sale of The Westin Singapore ($372.4 million) signaled the health of Japanese investors; and the Hilton Tokyo Bay acquisition ($293.06 million) showed that Japan hotel REITs were the driving force behind Japanese commercial property transactions."
The two markets with the largest investment sales decreases were Hong Kong and Southeast Asia, with transaction volumes dropping by 73.6 percent and 24.3 percent year-over-year, respectively.
Going forward, the firm expects investors to focus on core properties.
With a low interest rate environment created by monetary policy, Savills predicts an investment volume of approximately $9.0 billion in the Asia Pacific hotel property market in 2014.