ASIA PACIFIC: According to Cushman & Wakefield’s latest market release published by Real Estate Asia, the Asia Pacific real estate sector is set to experience significant shifts in 2025. With substantial changes anticipated across office, logistics, industrial, and capital markets, the region is poised for notable growth. This development is driven by varying economic trajectories, strategic market adjustments, and evolving global dynamics.
Robust demand in the office market
The office market in Asia Pacific is expected to remain resilient, with strong demand projected to continue throughout 2025. Cushman & Wakefield forecasts an average absorption of 75 million square feet (msf) of office space annually during the forecast period, with India leading the charge. Cities like Bengaluru and Hyderabad are at the forefront of this surge, reflecting India’s robust economic performance.
However, a notable increase in new supply—exceeding 100 msf in 2025-2027—could push regional vacancy rates to nearly 20%. As a result, office rental growth is expected to remain modest, averaging around 2% annually. Variations in rental trends will depend largely on local market conditions, highlighting the need for businesses to consider micro-level dynamics when planning their office space strategies.
Logistics, industrial sector stabilizing after rapid growth
The logistics and industrial sector in Asia Pacific have encountered challenges in recent years, with growth normalizing following the surge driven by pandemic-related demand. Geopolitical uncertainties and economic slowdowns have also impacted market dynamics, yet the sector is poised for improvement in 2025. Occupier demand is expected to rise, driven by stabilizing interest rates and accelerating economic growth in key markets like Australia, India, and Southeast Asia.
While vacancy rates in most logistics markets have trended upward, rental growth is anticipated to stabilize, with some regions like Hong Kong and Shenzhen facing slight declines. Intraregional trade, which has grown five-fold since 2000, will continue to serve as a stabilizing force for the sector. As markets adjust to the evolving global landscape, the logistics and industrial space will remain a vital component of the Asia Pacific real estate ecosystem.
Capital markets – signs of stability and growth
The investment market in Asia Pacific has now reached its bottom, with volumes expected to rebound in 2025. Cushman & Wakefield report that investment volumes for stabilized assets reached USD 153 billion in Q3 2024, showing a modest increase from the previous quarter. With property values stabilizing, the region is poised to recover roughly half of the peak-to-trough decline, with an estimated investment volume of USD 200 billion in 2025.
As the bid-ask spread narrows between vendors and buyers, pricing stability is becoming evident, offering a more predictable environment for investors. This stabilization will likely support sustained growth in the capital markets, with a more balanced outlook for the Asia Pacific real estate sector overall.
As Asia Pacific continues to adapt to evolving global dynamics, real estate stakeholders must remain agile to harness the opportunities that lie ahead.
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