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KEY TAKEAWAYS
Australia’s living sectors present strong opportunities for institutional capital, driven by sustained undersupply, record migration, and rising rental demand across student housing, build-to-rent, and co-living. These dynamics are supporting rental growth, high occupancy, and scalable investment platforms that offer stable, inflation-aligned income streams. At the same time, healthcare real estate and ageing-related assets offer long-term, multi-decade demand, reinforcing Australia as a compelling market for patient capital seeking resilient returns.
The fragile Iran-US ceasefire announced April 8th sparked a sharp risk-on rally, though uncertainty over the agreed terms and continued disruption to Strait of Hormuz shipping warrant near-term caution. China’s rumoured role as a mediator is a constructive development. A credible resolution that restores oil flows should disproportionately benefit Asian risk assets. Separately, weaker U.S. growth, partly driven by higher oil acting as a demand tax, may prompt Fed easing later in 2026, an additional tailwind for Asian equities and currencies.
Japan is the most near-term eventful market. BOJ rate hike expectations for the April 27–28 meeting are live (~50–60% probability), though we favour a summer move pending wage data and conflict resolution. We do not expect a hike to materially re-rate J-REITs negatively, given investor familiarity with the hiking cycle and rising real incomes. Tokyo office fundamentals remain exceptionally tight (8% YoY rent growth, 2.2% vacancy), and major developer FY March 2026 results/guidance are the key upcoming catalyst. J-REIT underperformance in Q1 likely reflects fiscal year-end selling pressure from Japanese institutions rather than fundamental deterioration.
Australia faces a split RBA (last decision 5:4), that may not need to tighten as aggressively as feared if supply-driven inflation produces demand destruction. Residential-exposed names Stockland and Mirvac trade at multi-year discounts, a sharp re-rating is possible if macro data softens. Goodman Group is expected to upgrade full-year guidance; Scentre Group’s guidance appears conservative and could surprise positively.
Singapore & Hong Kong both enter reporting season with solid underlying operating trends, though the conflict introduces risk. Singapore residential has been resilient; S-REIT data centre names remain a notable anomaly, underperforming sharply versus US peers (DCREIT +2.4% vs. Digital Realty +22.4% YTD) despite strong fundamentals and attractive yields. MAS is expected to allow SGD appreciation to manage inflation, keeping domestic rates contained. In Hong Kong, Q1 transactions rose 46% YoY to 23,300 units, but an inventory overhang and a crowded launch pipeline introduce demand air-pocket risk if geopolitical sentiment deteriorates. Large-cap developers (SHK +46% YTD, +111% YoY) have run hard; risk-reward is less compelling at current levels.
Key near-term catalysts: BOJ MPM (Apr 27–28), Japan CPI (Apr 24), RBA decision (May, TBC), major developer earnings
Here are the key takeaways from the recent APREA Singapore Conference, where industry leaders and experts explored market trends, capital flows, and emerging opportunities in real assets. While the discussions acknowledged near-term uncertainties, the overarching sentiment focused on positioning for the next phase of growth. These highlights capture the core themes currently shaping investment strategies across the region.
ASIA PACIFIC DATA CENTRE MARKET OVERVIEW
Asia Pacific continued its sharp growth, adding about 1,557MW of capacity to its operational stock during 2025. The development pipeline also increased by 5,033MW during the same period. Despite the sharp increase in operational stock, the vacancy declined from 12.4% in H2 2024 to 10.9% in H2 2025 reflecting strong demand for digital infrastructure in the Asia Pacific region.
India’s flex space market has undergone one of the most dramatic transformations in the country’s commercial real estate history. From a niche category accounting for just 2.2 mn sq ft of transactions in 2017, the segment has expanded to 18.6 mn sq ft in 2025, representing an 8.4× increase over eight years and a CAGR of 30%, significantly outpacing the broader office market, which grew at 9% during the same period. This structural outperformance reflects a fundamental realignment in how occupiers from global enterprises to early-stage startups conceive of, consume, and contract for workspace.
Market Overview
The outbreak of conflict in Iran has introduced a new layer of uncertainty for Asian real estate markets, with the primary transmission channel being higher oil prices and their impact on inflation expectations and central bank policy across the region. While the US appears intent on keeping the conflict limited, equity market weakness and rising bond yields may prompt the Trump administration to seek an early resolution — a dynamic that could cap the downside for risk assets.
Japan
In Japan, J-REITs have held up relatively well and present an attractive entry point as fiscal year-end selling pressure from financial institutions abates. Developers continue to deliver strong earnings, and while NAV discounts have largely closed, historical precedent and the prospect of strong May results suggest it is too early to exit.
Australia
A-REIT weakness predates the conflict, with rate hike fears weighing on residential names despite solid fundamentals and management confidence on demand. Goodman Group remains a key watch with guidance upgrades and data centre leasing announcements expected by mid-year. The May federal election is likely to bring housing supply policy into focus, a medium-term positive for Stockland and Mirvac.
Singapore & Hong Kong
Singapore developers have significantly outperformed SREITs over the past year, underpinned by resilient residential demand — as illustrated by GuocoLand’s strong weekend launch — though the sector has already re-rated considerably. In Hong Kong, developers had reached multi-year highs prior to the conflict and have since corrected; REITs may offer near-term defensiveness as profits rotate out of developers. Accommodative monetary conditions and the prospect of policy support under China’s 15th Five-Year Plan, including a potential inclusion of REITs in Stock Connect, provide a constructive medium-term backdrop for Hong Kong.
Japan’s next real estate cycle is opening up compelling opportunities across data centres, urban rental housing, energy-secure assets, hotels, and modern logistics, supported by political stability, policy continuity, and strong structural demand drivers.
Rising rents, a weaker yen, tourism recovery, and corporate reform are also creating attractive entry points for investors seeking value-add, repositioning, and long-term income growth, particularly in well-located and under-managed assets.
For investors able to execute actively, Japan offers a rare combination of transparency, liquidity, income resilience, and structural upside in one of the world’s most established core markets.
Asia Pacific Investment Insights – March 2026 report finds investment volumes reached US$162billion in 2025, an 8% year‑on‑year lift, supported by improving market clarity, easing financial conditions and renewed buyer confidence.
Key highlights include:
With stabilising interest rates and gradually recovering cross‑border capital flows, momentum is set to strengthen further in 2026.
Kemmu Kawai joined Longevity Partners Japan in September 2022 as the Country Director. Based in Tokyo, he oversees all operations and activities in Japan, the Asia-Pacific region and beyond. He brings him more than 16 years of experience in finance where he specialised in real estate and credit investments. Before joining Longevity Partners, he served as a Portfolio Manager at Norinchukin Bank and as Investment Manager at Center Point Development.
Kemmu Kawai
Managing Director
Longevity Partners
