Thought Leadership

Real estate investments during H1 2025 were largely driven by domestic investors in most Asia Pacific markets, while offshore interest persisted in key hubs such as Australia, India, Singapore and Hong Kong.

The region’s investment outlook is expected to remain steady and resilient through 2025 and into 2026, supported by a lower interest rate environment, moderating inflation and sustained economic growth across key markets.

Key insights:

• Office remains the asset class of choice, with retail gaining pace.
• South Korea, Japan and Australia drove nearly two-thirds of investment volumes.
• Growing appetite for alternative asset classes such as data centres, life sciences and student housing.
• Growing confidence of local investors, underscoring resilience across the region.

As workplace patterns continue to change, occupiers in Asia Pacific are accelerating the return to office and elevating the workplace experience.

CBRE’s 2025 Asia Pacific Office Occupier Survey, with insights from nearly 300 corporate real estate executives, highlights:

• Workplace effectiveness: Insufficient small rooms (48%) and lack of vibrancy (35%) remain top challenges. Adjusting workstation sizes and desk-sharing ratios can help improve efficiency.
• Tighter attendance protocols: 82% of occupiers now impose consequences for non-compliance (+16 percentage points y-o-y), with office utilisation improving in 2025.
• Core and quality preference: Smaller companies display the strongest appetite for growth. 65% of occupiers planning to move prefer CBD cores, but most availability is in non-core areas.

India’s office market has reached a major milestone of 1 billion sq ft in H1 2025, valued at INR 16.07 trillion (USD 187 billion), accounting for 27% of the country’s real estate market.

• Growth & Value: India is now the 4th largest office market globally by area. Bengaluru, NCR, and MMR collectively hold 72% of the total office stock value.
• Supply & Demand: The supply-demand ratio has declined to 0.41, with Grade A stock making up 53% of the supply and single-digit vacancy rates, indicating robust demand.
• Development Landscape: No single developer has an all-India footprint. Office development remains uneven across cities, and residential profitability is undermining commercial supply.
• Retrofitting Opportunity: About 30% of India’s office stock is retrofit-ready, mostly located in CBD and SBD zones. Retrofitting can significantly boost rental income, occupancy, and asset value.
• Future Outlook: India is on track to hit 2 billion sq ft by 2036–2041, with cities like Hyderabad and Pune leading stock growth in recent years.

Economic Rent and New Office Development: Increasing construction costs, rising land values, and asset repricing are leading investors to scrutinise theoretical rents more closely when planning new office developments. Investors are looking more closely at ‘economic rents’, which measure the rental income needed to justify development costs and are reassessing office developments across the region. 

Regional Variations:  Most markets in Asia Pacific have reported significant growth in economic rents over the past five years, led by Australia. In Asia, Singapore, Seoul and Beijing have seen the greatest growth.

Postponed New Office Developments: CBRE expects Asia Pacific office developments will continue to be postponed as investors find it difficult to justify commencing work on new schemes. This will constrain the supply pipeline in the medium term. As a result, the region’s office markets will adjust to the tighter supply-demand imbalance, which will help rental growth align with the change in construction and land costs.

Office Investment Hotspots: With the office outlook improving and pricing at the top of cycle in most APAC markets, investors are expected to continue to target acquisitions of existing stock. Markets with strong rental prospects such as Australia, Japan, India, and Korea, will attract investment demand in H2 2025.

In Singapore, investment remains buoyant despite operating performance normalising along with new supply; Indonesia hotel performance mixed as investment liquidity remains a challenge; Strong tourism growth in Vietnam boosts hotel performance and lures new investors.

Sentiment remains positive in Singapore but conditions diverge across eastern and western markets; Solid regional demand and domestic consumption underpin firm leasing demand in Japan; In Australia, transaction activity remains stable as Sydney continues to outperform.

Leasing demand in Vietnam remains strong amid influx of new entrants from mainland China; Demand holds firm in Singapore as retailers expand cautiously in anticipation of slower consumption; Leasing market in India improves after slow start to year, backed by positive domestic consumption.