Investor Confidence Strengthens Amid Stabilizing Interest Rates
Investor sentiment towards commercial real estate in the Asia Pacific region has rebounded in 2025, with a notable increase in buying intentions. According to CBRE’s 2025 Asia Pacific Investor Intentions Survey, net buying intentions have surged from 5% in 2024 to 13% this year. This resurgence is largely driven by declining debt costs, asset repricing, and growing interest in core-plus and value-add strategies.
Greg Hyland, Head of Capital Markets, Asia Pacific at CBRE, attributes this positive shift to stabilizing financial conditions. “We are seeing the capping of interest rates in many Asia Pacific markets. In some locations, rates have started to decline, offering investors greater confidence that we have reached the peak of the rate cycle,” he explained.
Despite the improving outlook, investor caution persists due to global economic uncertainties and the US Federal Reserve’s more conservative stance on interest rate reductions.
REITs and Institutional Investors Drive Market Activity
Among investor categories, real estate investment trusts (REITs) and institutional investors are set to be the most active buyers in 2025.
REITs, which were net sellers in recent years, now exhibit a net buying intention of 22%, a sharp reversal from -13% in 2024. Additionally, sovereign wealth funds and pension funds are expected to boost their allocations to commercial real estate.
Private equity funds and high-net-worth investors continue to remain active but are focusing more on value-add and opportunistic strategies. Meanwhile, property developers are expected to maintain a neutral stance due to rising construction costs and financing challenges.
Tokyo, Sydney, and Singapore Lead Investment Destinations
For the sixth consecutive year, Tokyo has retained its position as the top destination for cross-border real estate investment in Asia Pacific. Investors continue to be drawn to Japan’s low-cost debt and stable income streams, although the Bank of Japan’s recent policy shift towards monetary tightening could introduce new market dynamics.
Sydney and Singapore also remain highly favored by investors. Sydney’s appeal has increased due to asset repricing following interest rate fluctuations, while Singapore continues to attract capital due to its stable economic environment.
Emerging markets like India and Vietnam are also gaining traction, with Mumbai and New Delhi entering the top 10 investment destinations for the first time. “India has become a high-growth market, attracting significant capital from global investors,” said Hyland.
Diversification Beyond Industrial & Logistics
While industrial and logistics assets remain the most sought-after investment class, CBRE’s survey indicates a growing interest in other sectors, including offices, retail, hospitality, and alternative assets such as data centers and healthcare-related properties.
“The industrial and logistics sector continues to dominate, but interest is broadening,” noted Hyland. “We are now seeing increased investor demand for office spaces, particularly in Australia, Singapore, and Korea, where leasing activity has stabilized.”
The data center sector is also witnessing strong capital inflows, fueled by the rise of artificial intelligence and digitization. “This is the early phase of a multi-year trend where we expect increasing allocations to data center assets,” Hyland added.
Additionally, the living sector, including build-to-rent and build-to-sell projects, remains attractive. However, a lack of investable assets outside of Japan, Australia, and China has led to a stabilization of investor demand.
Positive Outlook as Capital Flows Increase
As interest rates stabilize, CBRE forecasts a 5% to 10% increase in commercial real estate investment volumes in 2025. The combination of attractive pricing, recalibrated investment strategies, and a broader interest in emerging asset classes suggests that 2025 will be a year of renewed market activity across Asia Pacific.
Read CBRE’s 2025 Asia Pacific Investor Intentions Survey for deeper insights into investor sentiment and emerging market trends.
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