Market Outlook

The Asia Pacific commercial real estate market is poised for another solid year in 2026, with both investment and leasing activity forecasted to strengthen, backed by the region’s resilient economy.

Despite the bright outlook, there remain headwinds, with trade related volatility and geopolitical tension among the challenges set to exert a strong influence over real estate decision-making in the coming year.

The real estate landscape is shifting, especially in the office sector where prospects are brightening, and in the logistics sector, where performance is cooling after a prolonged period of robust growth. Across all sectors, medium-term supply is projected to contract, marking a significant shift from the current oversupply situation. These changes to market fundamentals will exert a strong bearing on investors’ allocations to individual sectors, while more limited room for yield compression will compel property owners to place a stronger focus on income growth potential.

Against this backdrop, occupiers and investors must reassess current strategies, portfolios and requirements, while embracing new sectors, technologies and approaches, leading us to adopt the theme of “Recalibrate & Innovate” for this year’s report.

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. 

Asian real estate securities saw strong performance in 2025, but face new headwinds as interest rate expectations shift. While Singapore continues to benefit from falling rates, Japan and Australia are confronting inflationary pressures and potential monetary tightening. Market dynamics remain highly regional, with significant differences in fundamentals and policy.

Key Regional Insights

Japan:

• BOJ expected to hike rates soon amid persistent core inflation and weak JPY.
• Labor shortages raising construction costs; strong rent growth across prime office markets.
• Landlords now successfully introducing CPI-based escalations in fixed leases.
• Near-zero vacancy rates point to continued rental upside.

Australia:

• Strong economic data has pushed back rate cut expectations, with some forecasts now pointing to hikes.
• Residential REITs still supported by demand and demographics but may face short-term consolidation.
• Goodman Group could outperform in short term; exited position in National Storage after fair M&A offer.
• M&A activity likely to continue — Abacus Storage King seen as a potential target.

Singapore:

• Rates continue to fall, helping REIT earnings and facilitating acquisitions.
• MAS’s EQDP program supports smaller listed companies, including REITs.
• SREITs are attractive due to lower rate risk, strong fundamentals, and favorable currency outlook.
• Parkway Life REIT set for 32% DPU uplift in 2026 from 2021; CICT and Frasers Centerpoint also favored.

Hong Kong:

• Fed’s December rate cut had little market impact; much already priced in.
• Residential and retail recovery expected in 2026; office remains sluggish but owner-occupier deals are a positive sign.
• Hongkong Land continues to outperform via asset sales and capital return strategies.
• New REIT initiatives like REIT Connect could be future catalysts.

The greater-than-expected shift in U.S. trade policy was the major surprise in H1 2025. Although April’s initial shock subsequently calmed after tariffs were lowered and several trade deals were signed, ongoing uncertainty continues to drag on regional economic and business sentiment. As a result, CBRE has revised down its 2025 GDP growth forecast for Asia Pacific from 4.1% to 3.7%.

While U.S. interest rates were unchanged in the first half of 2025, monetary policy in many Asia Pacific economies has turned more stimulative in response to weaker growth. Several central banks implemented more aggressive than expected rate cuts during the period. In Japan, the Bank of Japan (BoJ) may resume rate hikes before the end of the year after the country reached a deal in July with the U.S. on tariffs.

CBRE has upgraded its 2025 full year investment forecast to growth of 10% to 15% on the back of solid investor demand in markets such as Korea, Japan and Singapore. Strong fund raising activity and enlarging positive yield spreads in most markets are likely to provide ongoing support to investment, although yield performance will continue to diverge.

Office sentiment softened in Q2 2025, with most markets reporting a slower enquiries and decision-making. However, office leasing activity could pick up in H2 2025 amid stabilising business confidence and tighter return-to-office mandates. CBRE expects office leasing activity to be on par with that in 2024.

CBRE’s 2025 Asia Pacific Logistics Occupier Survey revealed a decline in optimism, with many tenants planning to right-size portfolios and restructure supply chains. However, logistics leasing volume is expected to remain steady, driven by landlords’ more flexible stance; resilient demand from domestic consumption-related firms and occupiers planning mid-to-long term expansion.

In the retail sector, weak consumer sentiment and subdued discretionary spending prompted retailers to be more cautious towards real estate planning in H1 2025. Retailers’ strong preference for prime core locations will ensure vacancy rates continue to decline but the pace of rental growth will remain mild.

Hotel Average Daily Rates (ADRs) continue to grow in most markets while occupancy is improving as hoteliers adopt different pricing and operational strategies to boost performance. Japan, Korea, Vietnam and India are set to lead Revenue Per Available Room (RevPAR) performance for the full year. 

Singapore’s industrial real estate sector remained resilient in Q2 2025, supported by growth in trade-related sectors such as wholesale, retail, and transportation & storage. However, vacancy rates rose due to a notable increase in new supply.

Key insights include: 

• The JTC All Industrial rental index marked its 19th consecutive quarterly increase, rising 0.7% QoQ in Q2 2025, up from 0.5% in Q1.
• Rental growth was positive across all segments, led by the multiple-user factory and business park segments.
• Industrial occupancy declined marginally to 88.8%, reflecting the impact of new completions.
• The price index grew by 1.4% QoQ, slightly slower than the 1.5% growth in Q1, reaching its highest level since Q4 2015, implying a 26.9% increase from its last trough in Q3 2020.

Summary: Logistics rents across the Asia-Pacific region declined marginally by 0.4% YoY in H1 2025 due to cautious occupier sentiment and shifting supply chain strategies. Despite the overall slowdown, India and Brisbane showed strong rental growth, while most Chinese markets continued to face pressure from rising vacancies and oversupply.

• India led the region in rental growth (+3.4%) driven by manufacturing, 3PL, and e-commerce demand.
• Brisbane recorded >5% YoY rental increase but faced rising vacancies and incentives.
• China saw continued rent drops due to oversupply; vacancy rates in Beijing and Shanghai exceeded 25%.

Outlook for H2 2025 includes slower leasing, more tenant-favourable conditions, and growing focus on strategic, resilient logistics hubs across the region.