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Market Outlook

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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

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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.

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Now in its fourth edition, Cushman & Wakefield’s Southeast Asia Outlook 2026 explores economic and real estate trends across Singapore, Malaysia, Indonesia, Thailand, Vietnam and the Philippines, with a focused view on the Singapore property market.

Despite global trade uncertainty, Southeast Asia remains one of the world’s fastest-growing regions, expanding by 4.8% in 2025 and projected to grow 4.3% in 2026.

Resilient domestic consumption, easing inflation and moderating interest rates continue to support regional growth. Structural drivers — including supply chain diversification, rising urbanisation and sustained foreign direct investment — reinforce Southeast Asia’s long-term real estate potential.

Within this regional context, Singapore remains Southeast Asia’s most transparent and institutional real estate market, benefiting from its safe-haven status, stable currency and global connectivity.

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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.

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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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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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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.
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Asian Market Outlook – August 2025 (B&I Capital)

Macro Overview

  • Favorable backdrop for Asian REITs as inflation cools in Asia ex-Japan and peaks in Japan.
  • Weak US labor data and tariff induced economic instability signal potential Fed easing.
  • Stable to declining inflation across Asia supports RE demand, with high occupancy and rising rents in most sectors.
  • Asian RE securities may act as equity safe havens in a weak USD environment.

Japan

  • BOJ closer to rate hike amid elevated inflation assessments.
  • JREITs have aggressively sold less competitive assets to fund unit buybacks, maintaining performance despite rate concerns.
  • Rent growth offsets interest expense; preference remains for Office, Hotel, Diversified, and Logistics REITs.
  • Construction cost increases and regulatory tightening (e.g., Chiyoda ward) may dampen Developer sentiment.
  • Large developers’ Q1 results are expected strong, but short-term catalysts are limited.

Australia

  • RBA held rates steady, but recent trimmed mean inflation suggests easing is likely.
  • FY2025 earnings should meet/exceed guidance, though FY2026 guidance may be conservative due to slower rate cuts.
  • Goodman Group may underdeliver on guidance due to slow JV/tenant signings for data centers.
  • Office market shows recovery, with peaking vacancy/incentives—positive for names like Charter Hall, Dexus, and Mirvac.

Hong Kong

  • Positive momentum across sectors: Lower HIBOR supports funding, stock market and IPO activity improving, which has historically led to increase in office space demand.
  • Luxury retail leads sales growth; residential sector benefits from easing buyer restrictions.
  • Proposal for a “Property Purchase Capital Connect” could boost demand by 45k units.
  • Preference for Retail REITs (e.g., Link REIT, Fortune REIT) and HK Land for its capital return focus and NAV narrowing strategy.

Singapore

  • Continued capital raises (e.g., CICT’s USD 500m for CapitaSpring) reflect proactive acquisition strategies.
  • Falling inflation (<1%) supports lower refinancing costs and likely boosts equity demand for REITs.
  • Sector fundamentals remain strong despite some selling pressure to fund capital raises to create opportunities.
  • Centurion is marketing a new REIT backed by worker dormitory and student accommodation, likely to draw strong interest.
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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. 

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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.
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