Thought Leadership

• The Japanese economy is stagnant but not in recession due to decline in demand caused by rising prices and slowdown in recovery of the Chinese economy.
• The market for for-sale real estate in Japan has recovered from the sudden slowdown caused by the impact of COVID-19, and the supply-demand balance has been barely maintained due to decline in demand caused by rising prices and decrease in supply accompanying rising costs despite rising interest rates.
• Hotels and retail properties in Japan continue to thrive following recovery from slowdown due to the impact of COVID-19, as the weak yen attributable to differences in monetary policy and other factors has stimulated inbound demand.
• In the rental market for office buildings in Japan, vacancy rates continue to decline slowly, and rents continue to rise gradually with some exceptions.
• Although transaction prices have been maintained, both the number of transactions and their amounts are slumping due to a decline in properties for sale, with some investors turning to a cautious stance.
• Comparing the economic growth rates and inflation rates of major advanced countries and developing countries, the former show similar fluctuations depending on the country and time period, while indicators for the later show diverse trends.
• Among the economic growth and inflation rate indicators of advanced countries, only Japan’s inflation rate shows a clear downward shift.
• Among the major countries compared, Japan‘s population has been on a long- term downward trend as natural decrease has not been fully compensated for by social increase.
• The populations of major countries continue to grow due to social growth, but the US population is thought to be rapidly increasing, including through illegal immigration, and the economic growth rate is expected to be swinging upward significantly.

CBRE’s latest Asia Pacific Leasing Market Sentiment Index reveals that overall leasing sentiment improved in Q1 2025, driven by a rise in office and retail demand:

• Office – Sentiment improves in multiple markets: Moderate increase in enquiries and site inspections across most markets, partly due to seasonal factors. While regional leasing activity continued to be dominated by renewal vs. relocation decisions, expansionary appetite for office space increased in India and Japan.
• Retail – Expansionary demand continues: Prime space in core locations underpinned improved leasing sentiment. However, rents in most markets were largely unchanged as retailers adopted a more cautious attitude towards real estate planning. 
• Industrial & Logistics – Tenant market persists: The overall market remains predominantly in favour of tenants amid slower leasing activity in mainland China and Hong Kong SAR. However, the period witnessed a moderate increase in site enquiries as selected occupiers sought cost-saving options for consolidation and downsizing.

Singapore is strengthening its position as a global capital market by leveraging its strategic location, regulatory incentives, and focus on emerging asset classes such as REITs, data centers, and logistics.

With the Monetary Authority of Singapore’s recent SGD 5 billion investment program and streamlined listing regulations, the city-state is enhancing liquidity and attracting more regional and international players. As de-globalization and geopolitical tensions shift capital flows, Singapore’s emphasis on innovation and diversification ensures its continued relevance in the global economy.

Despite near-term economic and geopolitical uncertainty, Asia Pacific’s economy continues to adapt to fluctuating conditions, including easing inflation and modest interest rate cuts in response to the U.S. Federal Reserve’s cuts in 2024. Foreign exchange sensitivities continue to play a role in fit out costs. Interest rates, which have shown a modest decline in in U.S. dollar terms, have risen by 5% on average in local currencies throughout APAC. Regional office demand is expected to remain stable, though supply will likely exceed demand and push vacancy rates upwards. 

Rapid growth in the Asia-Pacific data center market due to cloud adoption, 5G, and increased digital demand. It boasts 12.2 GW operational capacity and 14.4 GW under development, with China, Japan, Australia, and India leading. Key trends include hyperscale providers and sustainability efforts, while private equity continues to show interest. Emerging markets like Delhi and Taipei are also growing.

Rebound in tourist arrivals sparks investor interest in hotel assets amid limited supply in the region. Tokyo leads as the top city for hotel investment, followed by Sydney, with Seoul and Bangkok tied for third, and Singapore and Osaka both in fifth place.

Logistics rents in the Asia-Pacific region saw a modest 0.2% year-on-year increase in H2 2024, with Melbourne experiencing the strongest growth at 6.7%, while Beijing and Shanghai faced declines due to oversupply. Vacancy rates are expected to remain stable in 2025.

A comprehensive analysis of office market performance across key cities, including Singapore, Hong Kong, Tokyo, Sydney, and Mumbai. Despite macroeconomic uncertainties, occupiers are adapting to evolving workplace dynamics. It provides comprehensive data on rental trends, vacancy rates, and emerging market opportunities, offering valuable perspectives for investors and occupiers alike.

Reimagining Real Estate: A Framework for the Future provides a pathway for the industry to create more liveable, sustainable, resilient and affordable buildings. The framework underscores that robust and resilient capital markets are key to achieving that vision and explores how technology, infrastructure and putting people at the heart of development all drive long-term value.

Calls to action for both the public and private sectors emphasize the necessity of collaboration amid an increasingly complex global landscape and case studies demonstrate what is possible.

Hotel performance enjoys solid recovery in Thailand; creativity key for investors. In Australia, growth moderates as volume of Australians travelling abroad outpaces international arrivals. International demand drives performance gains in Korea; investors seek operational agreement flexibility.