Why Asia’s rental housing markets outside Japan are luring investors

Last year, investment in Japanese multifamily properties reached US$6.3 billion. While this accounted for 16 per cent of commercial real estate transaction volumes in Japan, it constituted almost half of the investment in institutional-grade rental housing in the whole of the Asia-Pacific.

As the largest developed economy in the region, Japan has long dominated the investible rental housing market. According to LaSalle, “Japan’s multifamily sector is similarly mature to its US counterpart or UK [purpose-built student accommodation]”.

Outside Japan, however, institutional ownership of rental housing in the Asia-Pacific is in its infancy. Transaction volumes in the living sector – which includes traditional rental housing, student housing, housing for seniors and land lease communities – excluding Japan were less than US$6 billion in 2024, according to MSCI data.

A cursory glance at investor surveys shows rental housing is one of the most sought-after real estate sectors in the Asia-Pacific. The results of an annual survey conducted by the Asian Association for Investors in Non-listed Real Estate Vehicles in January revealed that Sydney’s residential build-to-rent sector had the strongest appeal.

However, the survey also showed that the residential sector had barely figured among the most actively traded segments of the region’s commercial real estate market in the past several years. South Korean offices, Chinese industrial properties and Japanese offices were among the most widely traded sectors.