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The global data centre market remains dominated by cloud and corporate usage, with AI contributing less than 15% of total workload as of 2025. With most AI demand now concentrated in the U.S., the ratio in Asia Pacific is even smaller.

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Southeast Asia’s real assets markets continue to present compelling opportunities as supply-chain diversification, digitalisation, and AI-driven demand reshape capital flows across the region. Investors are increasingly targeting high-growth sectors such as logistics, industrial assets, data centres, and hospitality, with Vietnam, Malaysia, Indonesia, and the Philippines emerging as key beneficiaries of manufacturing expansion, tourism recovery, and digital infrastructure investment. Even amid geopolitical uncertainty and elevated borrowing costs, resilient domestic demand, infrastructure development, and the search for stable long-term income are reinforcing Southeast Asia’s position as an attractive destination for global capital.

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  • China’s commercial REIT market is entering a new phase of growth, driven by policy support, expanding asset classes, and increasing emphasis on institutional-grade asset management and value creation.
  • A multi-level REIT ecosystem is taking shape, with institutional and private REITs playing a critical role in capital recycling, operational enhancement, and the maturation of income-generating assets.
  • China’s real estate investment landscape is undergoing a structural reset, with domestic capital, selective deployment strategies, and REIT-based exit pathways becoming increasingly central to market recovery and long-term resilience.
  • High-growth sectors such as data centres, renewable energy, and experience-led retail are reshaping China’s real assets market, supported by technology adoption, evolving consumer behaviour, and the transition toward cleaner energy infrastructure.
  • The C-REIT ecosystem is evolving toward a more operationally driven and institutionally scaled model, with opportunities emerging from distressed assets, urban renewal, and professional asset management. 
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APREA Investor Compass featuring Jericho P. Go (RL Commercial REIT Inc.)

Highlights:

  • Real Assets, Real People: Jericho P. Go, President and CEO, RL Commercial REIT Inc. (RCR)
  • TrendWatch: Political Stability and Structural Demand Power Japan’s Next Real Estate Cycle
  • ESG Buzz: How Nature-Based Solutions Future-Proof Asia Pacific Real Assets

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Q1 2026 opened against one of the most severe global supply chain disruptions in recent memory. The US-Israel military campaign against Iran, launched in late February, triggered the effective closure of the Strait of Hormuz, through which roughly 20% of the world’s seaborne oil and LNG volumes transit, with major carriers including Maersk, CMA CGM and Hapag-Lloyd suspending operations through the strait entirely. Shipping companies were forced to reroute vessels, delay deliveries or suspend operations, causing a slower and materially more expensive global supply chain. Against this backdrop, the Indian rupee depreciated approximately 9% over FY 2026, reaching around INR 93.88 per USD. Sustained dollar demand from oil importers widened the current account deficit and raised landed costs for USD-denominated freight and equipment procurement, compressing margins across the logistics sector. Yet India’s macroeconomic foundations held firm. FY 2026 real GDP growth forecast came in at 7.6%, outperforming expectations, and the RBI has projected FY 2027 growth at 6.9%, supported by strong services sector activity, robust domestic consumption and ongoing GST rationalisation benefits, even as the RBI flagged downside risks from further geopolitical escalation.

Against this backdrop, industrial and warehousing activity remained buoyant, driven primarily by Manufacturing and Third-Party Logistics (3PL) occupiers, reinforcing India’s position as a resilient and strategically located hub for regional supply-chain diversification. Occupier activity continued to strengthen despite the volatile macroeconomic environment, with leasing volumes reaching 1.8 mn sq m (19.3 mn sq ft) in Q1 2026, reflecting a 15% YoY increase. Notably, this marks the second-highest quarterly transaction volume recorded since the beginning of 2023, underscoring sustained occupier confidence and strong underlying market momentum.

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Regional Overview

  • Asian RE securities have been recovering from the Iran conflict selloff but remain well off YTD highs, underperforming broader Asian equities led by tech/semiconductors
  • The gap reflects concern over higher crude oil prices feeding into inflation across Gulf-dependent Asian economies and the prospect of further central bank tightening
  • Asian currencies have recovered but sit below February highs; the AUD is the exception, hitting new YTD highs post the RBA hike
  • A ceasefire progressing towards a JCPOA-style agreement should push oil prices lower, support treasuries, and drive a recovery in interest rate sensitive sectors including REITs. Each announcement signalling a reopening of the Straits of Hormuz has produced USD weakness and a treasury rally

Japan

  • The BOJ held rates at its April meeting despite market expectations for a 25bps hike to 1%. The vote was 6-3 in favour of a hike, up from just one dissenter at the prior meeting; a summer hike remains likely, with the July meeting (full Outlook report) the probable timing
  • Real rates based on short-term rates remain negative; the sooner the BOJ normalises, the better for the J-REIT sector, which trades at persistent NAV discounts despite a strong transaction market. Continued asset sales and buybacks are expected if discounts persist
  • Full year results for Mitsui Fudosan (8801), Mitsubishi Estate (8802) and Sumitomo Realty (8830) due May 13th. Sumitomo Realty has outperformed YTD, likely driven in part by its higher Tokyo office exposure relative to peers, and now trades at a PE premium and a slightly smaller NAV discount vs. peers; risk of profit taking if guidance disappoints. Elliott holds 3.5%; a breach of 5% would signal deeper engagement
  • Few earnings catalysts expected from the developers after May. A major catalyst for J-REITs is potential inclusion in the Topix, with a decision likely this Fall. One broker estimates the inclusion could generate c.68 days of buying impact (assuming 25% of average trading value), with 47 of 58 J-REITs meeting market cap thresholds

Australia

  • A-REITs have been under heavy selling pressure since late 2025 as the RBA reversed course and hiked in February, March and May, unwinding all 2025 cuts; likely the shortest rate cycle in RBA history
  • Earnings impact should be contained vs. 2022-23 as most A-REIT debt costs are locked in and interest rate exposures hedged
  • The RBA is now likely to pause given potential demand disruption from the Iran war, even if imported inflation rises short-term. AUD strength also helps on the inflation front. A-REITs have historically outperformed after rate peaks
  • The Federal Budget on May 12th is the key near-term catalyst. The government will remove negative gearing for existing properties but is expected to retain it for new builds, a net positive for residential REITs and potentially beneficial for the BTR sector

Singapore & Hong Kong

  • A landmark transaction is in play: Khazanah and Temasek are marketing Marina One for c.SGD 5.7bn (c.SGD 3,030psf), slightly below the SGD 3,268psf Keppel REIT paid for MBFC Tower 3. Rumoured buyers are CapitaLand and Hongkong Land (HKL)
  • If CapitaLand acquires, it would validate the pricing at which HKL injected assets into SCPREF and bode well for office valuations broadly. CapitaLand would most likely need to establish a third-party fund as the acquisition would not be accretive to CICT, which just sold a Marina Bay asset on a similar valuation
  • The Singapore government announced EC-specific cooling measures on May 8th (longer holding periods, removal of deferred payment schemes). Near-term impact on developers is limited, but risk of broader measures targeting outside-Central Region residential prices remains a concern for Singapore developers that have outperformed vs. S-REITs.
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Balanced Momentum: Moderating Growth with Selective Strength
The Asia Pacific Cap Rates Report highlights quarterly cap rate movements across the region, providing a clear benchmark for investment returns and identifying opportunities across the office, retail, and industrial sectors.

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Key Highlights:

  • India is gaining importance in global portfolios, supported by strong fundamentals and improving institutional frameworks, though execution and scalability remain key considerations.
  • Office demand remains robust, anchored by GCC expansion, with a clear shift toward high-quality, future-ready assets and emerging sectors such as data centres and flexible workspaces.
  • The investment landscape in India offers a compelling growth and yield proposition, with private credit and expanding domestic capital strengthening market depth and capital deployment.
  • Infrastructure is evolving into scalable, yield-generating platforms, supported by policy continuity, monetisation strategies, and increasing domestic capital participation.
  • REITs and InvITs are accelerating institutionalisation in India by improving liquidity, transparency, and enabling capital recycling, with significant room for expansion.
  • India’s retail sector is entering a new growth phase, driven by rising consumption and a shift toward experience-led, mixed-use developments.
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KEY TAKEAWAYS

  • Talent access is the defining driver of location strategy, cited by 78% of respondents. Employment and real estate costs follow as critical considerations.
  • Global talent hubs remain dominant. San Francisco and New York top Savills A&E Talent Index, with London, Zurich and Singapore also ranking strongly for depth and quality of expertise.
  • Cost-competitive alternatives are gaining appeal. Markets such as Dallas and Oslo offer access to specialist talent with lower overall employment and occupancy costs.
  • Space requirements remain under review. 39% of firms are maintaining square footage, 35% are consolidating and 25% are expanding.

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Strong tourism inflows and new infrastructure development boost hotel performance in Vietnam; Mumbai outperforms other Indian cities thanks to solid corporate, MICE and domestic demand; Hotel pricing in Goa moderates despite strong performance throughout peak season.

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