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CBRE recently released its Q1 2025 Asia Pacific Cap Rate Survey, offering insights into regional capital markets and investor sentiment. The report indicated an 11% year-on-year surge in commercial real estate investment to USD 33 billion, driven by lower interest rates and asset repricing. Despite concerns about newly introduced tariffs, particularly among investors in Mainland China, Hong Kong, and Singapore, the broader market has remained resilient. Notably, cap rate divergence emerged across the region, with compression in Australia and pressure in Greater China. Investor interest has intensified in sectors such as Australian retail, multifamily housing, and data centres, pointing to a promising outlook.
CBRE unveiled its Asia Pacific Cap Rate Survey for the first quarter of 2025 earlier this week, offering a detailed look into prevailing capital markets dynamics and investor sentiment across the region. This bi-annual report reflects a blend of on-ground insights and sector-specific cap rate shifts across key Asia Pacific markets. Advertisement
Greg Hyland, CBRE?s Head of Capital Markets for Asia Pacific, stated that although investors had taken a moment to reassess following the imposition of tariffs?particularly in relation to assets closely tied to exports?the overall disruption was largely contained to export-oriented sectors. He mentioned that as market clarity began to improve, interest in real estate across the region deepened, with investors actively engaging in multiple markets and asset categories.
Echoing a similar outlook, Ada Choi, CBRE?s Head of Research for Asia Pacific, noted that investor sentiment had remained stable, with half of the respondents indicating no shift in risk appetite. She pointed out that CBRE expected investment volumes in 2025 to increase by 5% year-on-year, fuelled by growing interest in fundamentally strong sectors such as Australian retail, multifamily housing, and data centres.
During the first quarter of the year, commercial real estate investment in the Asia Pacific region rose by 11% year-on-year, reaching USD 33 billion. This growth was attributed to falling interest rates and recalibrated asset valuations.
The survey revealed a clear divergence in cap rate movement across various markets. Australia?s shopping centres experienced cap rate compression, while in contrast, Greater China continued to face expansionary pressures on its cap rates.
In reaction to recent tariff developments, about 60% of the respondents expected investors to re-evaluate their investment pacing. Investor communities in Mainland China, Hong Kong, and Singapore expressed heightened concern, whereas those in Korea, Australia, India, and Japan showed more measured apprehension.
Private investors accounted for 28% and institutional investors for 12% of those with strong buying intentions. Interest in REITs and real estate funds also saw a marked increase compared to six months earlier.
Among countries, net buying intentions were most pronounced in New Zealand (77%) and Australia (48%), while Japan garnered the most interest from cross-border investors.
Key investment opportunities identified in the report included elevated yields or favourable pricing (63%), potential for rental growth (44%), and stable or improving occupancy rates (36%).
Interest in the multifamily and build-to-rent segment rose sharply to 44%, up from 34% in the Q3 2024 survey. Japan, Greater China, and Australia stood out as leading markets in this category. Demand for neighbourhood shopping malls also doubled over the same period, from 12% to 24%.
Among alternative asset classes, data centres emerged as the top choice, with 63% of respondents naming them their preferred investment.
The survey, conducted in April shortly after the United States announced a broad set of import tariffs, reflects CBRE?s in-depth market analysis from its brokers and valuers across the region.
The trajectory reflects a shift in focus towards long-term value, diversification, and strategic sector-specific opportunities such as data centres and multifamily housing. As market dynamics evolve, investor strategies are expected to adapt accordingly, positioning Asia Pacific as a core destination for global real estate capital in 2025.
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