Asia Pacific investors signal renewed confidence in commercial real estate in 2025

“Overall, investors have a stronger buying intention this year. What we are seeing is a combination of confidence returning to the market and investors catching up on allocations that had slowed over the past 12 to 18 months,” she said.

Figure 1: Purchasing and Selling Intentions

Despite this increase in positive sentiment, the momentum has been milder than some had anticipated, reflecting the US Federal Reserve’s indication that it will implement fewer rate cuts than previously expected. This caution has filtered through to Asia Pacific, affecting investor expectations for capital flows and asset pricing in 2025.

REITs and institutional investors poised for increased activity

Among investor categories, real estate investment trusts (REITs) and institutional investors are set to be the most active buyers in 2025.

REITs, which had been net sellers in recent years, indicated a net buying intention of 22%, a stark reversal from -13% a year earlier. Institutional investors, including sovereign wealth funds and pension funds, are also expected to increase allocations.

Private equity funds, real estate funds and high-net-worth investors are expected to remain active but at a slower pace, with a focus on value-add and opportunistic strategies. Meanwhile, property developers are likely to remain net neutral, given rising construction costs and lingering financing challenges.

Figure 2: Net Buying Intentions by Investor Type

Tokyo remains top destination for cross-border investment, while India and Vietnam gain ground

For the sixth consecutive year, Tokyo retained its position as the most preferred market in Asia Pacific for cross-border real estate investment. Osaka also attracted strong interest, buoyed by low-cost debt and stable income streams. 

However, the Bank of Japan’s recent policy shift towards monetary tightening could introduce new dynamics in the coming months.

“Tokyo and the bigger cities have been very attractive destinations for investors for a long period of time,” Hyland said. “The underlying fundamentals of the market have been relatively robust, underpinned by very low or negative real interest rates, and loose monetary policy. The Bank of Japan is starting to unwind those policies, so it will be interesting to see how that impacts the Japan market going forward.”

Figure 3: Top Cities for Cross-border Investment and Preferred Strategy

Sydney and Singapore followed Tokyo in the rankings, with investors drawn to Sydney’s value proposition after a period of interest rate-induced repricing and Singapore’s reputation for stability.

Meanwhile, India and Vietnam witnessed notable growth, with two cities from each country breaking into the top 10 investment destinations. 

“India seems to have taken over that mantle of the high-growth markets,” said Hyland. “We see it from our clients – they’re really shifting their focus and want to allocate more money to the Indian markets.”

Choi further noted the increasing investor appetite in these new markets. “We have seen Mumbai and New Delhi make the top ten for the first time, which speaks volumes about how investors are identifying India as a high-growth destination. Similarly, Vietnamese cities continue to gain attention as investment hubs.”

Investor interest shifts beyond industrial and logistics to diverse sectors

Industrial and logistics assets remain the most sought-after asset class, particularly among core investors, although CBRE’s survey suggests that interest is increasingly broadly across other sectors. 

“Industrial & Logistics is still the most favoured sector in Asia Pacific,” said Hyland. “However, interest levels have started to drop off as many investors have been quite aggressive in acquiring logistics properties over the last four or five years, and we have started to see some of the rent growth that has been explosive in several markets trend back to normal.” 

Figure 4: Investors’ Preferred Sector for Investment (% of respondents)

“Industrial and logistics remains top of mind for investors, but we are now seeing renewed interest in offices, retail, hospitality and also alternative sectors such as data centres and healthcare-related assets,” Choi added. “In the office sector, we are seeing increased interest after three years of declining investor preference, particularly in markets like Australia, Singapore, and Korea, where leasing activity has stabilised or is showing growth.”

In the data centre space, the growth has been significant, note both Choi and Hyland. “The amount of capital that is being driven by digitisation and AI is enormous, so we are starting to see the early innings of what we think is a multi-year trend for allocation of capital into data centres,” said Hyland.

The living sector also remains popular, with build-to-rent and build-to-sell opportunities attracting strong interest. However, a lack of investable assets outside of Japan, Australia, and mainland China has led to interest for the asset class stabilising after strong growth in demand over the past few years. 

Signs of recovery as interest rates stabilise 

“This year’s survey indicates investors’ growing willingness to allocate capital across diverse asset classes and new markets. While industrial remains dominant, investor interest is expanding, particularly in emerging asset classes and locations,” said Choi. “2025 is shaping up to be a year of recalibrated strategies and renewed investment activity across the region’s commercial real estate landscape.”