Asia Pacific real estate poised for growth in 2025, but uneven markets and unpredictable returns threaten investors

ASIA PACIFIC: As we head into 2025, the Asia Pacific commercial real estate market is on track for a year of stable growth, supported by a resilient regional economy and a favourable interest rate environment. According to CBRE’s 2025 Asia Pacific Real Estate Market Outlook featured in a Real Estate Asia article, while performance will vary across different markets and sectors, the region is primed for continued investment and leasing activity.

A focus on value-add opportunities

Investors are expected to continue preferring value-added opportunities, driven by the potential for high internal rates of return. The office sector, in particular, will remain a strong contender for investment, with Australia, Korea, and Singapore leading the charge. The industrial sector, especially in Australia and Seoul, will attract substantial interest, particularly in super-prime and dry logistics assets.

CBRE forecasts a 5-10% year-over-year increase in investment volumes, with Australia, Korea, and Singapore standing out as key hotspots. Meanwhile, Japan and India are expected to continue to draw investor attention, reflecting sustained interest in the region’s commercial real estate market. Ada Choi, Head of Research, Asia Pacific at CBRE, said, “Asia Pacific markets are at different points in their pricing cycles, leading to varied expectations for future returns on investments across the region.”

A flight to quality and sustainability

Leasing activity is expected to grow modestly in 2025, with occupiers prioritising high-quality, sustainable, and wellness-focused office spaces. The trend towards “flight-to-quality” will drive demand for premium properties, especially in markets like Australia, Korea, and Singapore. With abundant space, occupiers will have more options in mainland China, India, and Southeast Asia.

The office sector is set to experience an influx of new supply, with nearly 70 million square feet of office space expected to be completed across the Asia Pacific region in 2025. This marks the highest level of office space completion in two decades. While vacancy rates may rise, demand for prime core assets will continue to fuel leasing activity. Brisbane and Sydney’s central business districts (CBDs) are anticipated to be key drivers of rental growth. At the same time, markets like Seoul will see more normalized growth following significant price increases over the past few years.

As the region’s real estate market continues to evolve, CBRE’s forecast suggests a gradual recovery in investment activity, alongside ongoing demand for high-quality and sustainable spaces across various asset classes.