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KEY TAKEAWAYS

  • Companies increasingly adopted a “flight-to-quality” approach to their office location strategy, and Grade AAA offices continued to be absorbed, supported by the tight pipeline of new top-tier space.
  • According to Savills’ data, the vacancy rate for CBD Grade A offices fell by 0.3 of a percentage point (ppt) quarteron-quarter (QoQ) to 6.7% in Q4/2025. For the full year, vacancy declined by 1.3 ppts, reversing the 1.5 ppts increase recorded in 2024.
  • With a limited pipeline of new office developments and low vacancies, average CBD Grade A office rents continued to rise for the seventh consecutive quarter by 0.3% QoQ to S$9.96 per sq ft in Q4/2025. For the whole of 2025, office rents rose by 1.8%, outpacing the 1.1% growth seen in 2024.
  • For 2026 and 2027, Grade A CBD rents are expected to rise across the board. Grade A space will be dominated by large and financially strong companies and family offices while non-Grade A space would, over time, be either redeveloped or experience rising vacancy levels as their tenancy base consists of smaller subgroups of industries that face greater margin pressures. Our forecast for Grade A CBD office rent for 2026 remains at +2%.
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Asia Pacific’s commercial real estate market is entering a critical phase in 2026, showing strong resilience after challenges in 2025. With interest rates steady and capital markets improving, optimism is rising among investors and occupiers.

Based on our APAC Outlook 2026 and other reports, Six for 2026 spotlights the major trends influencing the region. These include changes in office supply and increased investment in AI-powered data centres, highlighting where growth and strategic opportunities are emerging.

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KEY TAKEAWAYS

  • Real estate investment sales in Singapore closed the final quarter of 2025 with total transactions amounting to S$10.97 billion. While this represented a 3.3% quarteron-quarter (QoQ) decline from the preceding quarter, activity levels were still resilient. It should be noted that the third quarter had a high base of S$11.35 billion.
  • Investment activity from S-REITs, institutional investors, and high-networth individuals remained healthy, underpinned by lower financing costs and strong fundamentals across most property segments. In addition, the impact of US President Trump’s tariffs proved less severe than initially anticipated.
  • The outlook for the investment sales market in 2026 is shaped by more than just the trajectory of interest rates. Fluid and volatile geopolitical developments are increasingly adding complexity to the picture. Given these conditions, we are maintaining our investment sales forecast for 2026 at approximately S$34 billion, in line with 2025 levels. Among physical assets, sectors likely to perform better this year include office, retail, and properties with redevelopment potential.

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Asia Pacific real assets are entering a more selective but opportunity-rich phase in 2026, as capital shifts decisively toward markets and sectors with clear income visibility, supply constraints, and structural demand drivers. Opportunities are most compelling where fundamentals underpin returns, particularly in Japan offices and multifamily, Australia build-to-rent and prime retail, Singapore’s resilient REIT-linked assets, and India’s offices and data centres supported by expanding global capability centres (GCCs) and digitalisation.

Across the region, pricing discipline and constrained new supply are creating favourable conditions for rental growth, while technological adoption and the energy transition are opening new avenues in data centres and infrastructure. 2026 presents a window to deploy capital into assets combining resilience, growth, and long-term thematic relevance.

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By Shai Greenberg; Hiroshi Takahashi; Akira Ota

Purpose

This study examines trends in the foreign ownership ratio of Japanese real estate investment trusts (REITs) from 2014 to 2023. Using panel regressions, it explores how firm characteristics, macroeconomic factors and policy interventions shape foreign investment patterns, offering insights for managers, investors and policymakers.

Design/methodology/approach

Using panel regression (fixed and random effects) on 33 J-REITs, this study analyses firm-level, asset type, sponsorship and macro-financial factors as well as the impact of inclusion in the FTSE EPRA/NAREIT Global Index effect on foreign ownership.

Findings

Market capitalization, yen appreciation, hotel sector exposure and global index inclusion are positively associated with foreign ownership, whereas higher leverage, Bank of Japan J-REIT purchases, stronger ROA, higher policy rates and logistics sector exposure are negatively associated.

Practical implications

The findings provide actionable insights: for investors, market size, sector and index inclusion signal liquidity and accessibility; for J-REITs, asset risk–return characteristics, sector choice and leverage discipline matter; for policymakers, index engagement and monetary policy influence foreign capital flows.

Originality/value

To the best of our knowledge, this is the first study to apply panel regression to foreign ownership of J-REITs, highlighting sectoral and macro-financial drivers and providing evidence from the world’s third-largest REIT market.

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The new office equation: Singapore’s workplace shifts for a hybrid, sustainable, multi-generational future

In Singapore and across Asia Pacific, organisations are rethinking workplace strategies and creating environments that drive performance and impact.

Our Workplace Survey of more than 800 corporate occupiers in the region, offers a unique view of how workplaces are taking shape.

Key Insights

  • 48% of organisations have invested or plan to invest to drive workplace quality and employee experiences.
  • 47% of organisations have hybrid models; most maintain attendance mandates and assigned seating.
  • 15% are already considering, and 40% are starting to explore, the needs of five generations in the workplace by 2030.
  • Sustainability is a bold ambition, with 52% collaborating with their landlord.
  • 20% use AI tools to enhance employee experience; 6% use desk booking data; 3% have occupancy sensors.

Read the full report to explore how you can shape an adaptive, high-performing and next-generation workplace.

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Investors move to capture momentum

Our Asia Pacific Insights report, drawn from the 2026 Colliers Global Investor Outlook, captures the views of senior Colliers experts across the region, along with the results of a survey of around 1,150 property investors – nearly 400 of whom were from Asia Pacific, analysing their priorities, strategies, and outlook for the year ahead. 

The reports provide a comprehensive view of the trends driving real estate investment and highlight a noticeable shift in global capital allocations toward Asia Pacific, as investors increasingly seek to diversify and capitalise on the region’s opportunities. 

Asia Pacific Insights | Key Highlights

  • Industrial and logistics and office remain top investor choices.; preferences for retail, hotels and multifamily/build-to-rent is rising.
  • Data centres are a major focus with strong capital deployment in Singapore, Australia and India.
  • Tokyo, Singapore and Sydney account for nearly 40% of investor preferences.
  • Japan’s domestic investors are set to boost volumes. India is emerging as a key market for higher returns and scalable deployment.  
  • 64% of regional investors anticipate economic growth in APAC next year, with nearly 60% positive on capital market liquidity and rental growth. 
  • Outlook 2026: More assets coming to the market, increased competition and steadily higher transaction volumes as the year progresses. 
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The Property Technology Paradoxes for 2026 report is now available.

Yardi’s latest report explores how real estate leaders across Asia Pacific are navigating the contradictions shaping technology adoption – from AI and cybersecurity to investment priorities and operational resilience.

Drawing on survey insights and perspectives from senior executives across the region, the report highlights key trends, emerging challenges and how organisations are balancing innovation with caution in a rapidly changing market.

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Tokyo Trip, Dec 2025, Executive Summary

  • Our December 2025 visit to Tokyo confirms that Japan’s real estate cycle remains unusually robust, underpinned by structural labour scarcity, constrained supply, and a broad-based acceptance of inflation. Despite rising interest rates, operating fundamentals across key sectors—particularly office, hotels, and urban retail—continue to strengthen, supporting earnings growth and capital discipline across both J-REITs and developers.
  • The dominant macro driver is Japan’s exceptionally tight labour market. Workforce shortages are reshaping tenant behaviour, with corporates increasingly prioritisng high-quality, centrally located offices to attract and retain talent. This has driven prime Tokyo office vacancy below 2.5% and rent growth above 5% YoY, with new supply in 2026–27 largely pre-leased. Importantly, escalating construction costs and labour shortages are delaying the typical supply response, suggesting that favourable supply–demand dynamics are likely to persist longer than in past cycles.
  • Rising inflation is now widely accepted across Japanese society, marking a structural break from decades of deflation. This shift is enabling landlords to push through rent increases more consistently, including in traditionally tenant-protective residential markets. CPI-linked rent clauses are beginning to appear beyond logistics and into office leases, improving the inflation resilience of cash flows.
  • Capital markets activity remains strong despite higher yields. Tokyo was the world’s largest real estate investment market in 2024, and transaction volumes remain elevated in 2025, supported by landmark deals from global private equity. Cap rates have compressed even as 10-year JGB yields approach 2%, highlighting the depth of investor demand for Japanese real assets. Within listed markets, J-REITs have responded rationally by recycling capital, selling non-core assets, and executing record share buybacks, demonstrating improved cost-of-capital awareness.
  • Developers have been standout performers, benefiting from inflation-linked business models and meaningful progress on corporate governance. Mitsubishi Estate, Mitsui Fudosan, and Sumitomo Realty have all delivered exceptional shareholder returns in 2025, supported by aggressive buybacks and asset disposals. Governance reforms—particularly Mitsubishi Estate’s explicit 10% ROE target—have materially improved investor confidence.
  • Looking ahead, we believe the listed real estate rally still has room to run. Sustained rent growth, delayed supply, disciplined capital allocation, and improving governance provide a supportive backdrop. However, selectivity is critical within the J-REIT universe: rising interest costs will increasingly differentiate those able to grow earnings from those that cannot. Overall, Japan’s listed real estate sector has emerged more resilient, more disciplined, and better positioned for the next phase of the cycle.
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