Sydney Ranks 2nd for Cross-Border Real Estate Allocation in Asia Pacific: CBRE Report
Sydney has emerged as a leading destination for cross-border real estate allocation in the Asia Pacific region, ranking second after Tokyo, according to CBRE’s 2025 Asia Pacific Investor Intentions Survey. The city’s appeal stems from asset repricing and expected declines in debt costs, making it an attractive market for custodians.
Allocation Trends in Sydney and Australia
Sydney’s strong ranking reflects a broader trend of selective custodian interest in Australian markets. Melbourne and Brisbane, ranked seventh, continue to attract cautious yet consistent attention from custodians.
Core assets are expected to see the highest capital growth as custodians prioritize stability and long-term appreciation. The survey highlights a shift in allocation sentiment across Asia Pacific, with net buying intentions rising from 5% in 2024 to 13% in 2025. This surge is primarily due to falling debt costs and favorable asset pricing.
Key Market Drivers
Greg Hyland, CBRE’s Head of Capital Markets, Asia Pacific, predicts allocation activity will accelerate in 2025, driven by anticipated rate cuts. Institutional custodians, REITs, and funds will likely lead this growth, focusing on core-plus and value-add opportunities.
Sectoral Preferences: Industrial, Office, and Data Centers
Industrial properties remain the top choice for Asia Pacific custodians, with core custodians showing strong demand. Interest in office and data center assets is also growing. Investors target core-plus and value-add office properties, while Southeast Asia’s data center market offers opportunistic pricing.
Ada Choi, CBRE’s Head of Research for Asia Pacific, highlights logistics and office assets as key allocation targets in 2025. Logistics properties in Japan and Australia remain popular, while India is gaining attention as a promising logistics allocation destination.
Sustainability and Alternative Assets in Focus
Geopolitical uncertainties concern over 40% of custodians, yet healthcare-related properties have emerged as the preferred alternative asset type. Additionally, 56% of custodians plan to acquire or develop green buildings, and 35% aim to expand renewable energy generation across industrial and residential sectors.
Final Thoughts
As Sydney strengthens its position as a prime real estate allocation hub in Asia Pacific, custodians are closely monitoring market shifts driven by rate cuts, asset repricing, and evolving sectoral preferences. With industrial and office spaces leading growth and sustainability initiatives gaining momentum, the city remains a compelling choice for global real estate custodians.
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