Asia-Pacific’s commercial real estate markets delivered a surprisingly resilient performance in the first half of 2025, with investment volumes up 18% year-on-year. Consequently, global real estate group CBRE has upgraded its full-year investment growth forecast for the region to 10%-15%.

In its 2025 Asia Pacific Real Estate Market Outlook Mid-Year Review, CBRE says two forces helped shape the regional landscape: the unfolding of a more dovish monetary policy cycle across Asia and lingering uncertainties from US trade policy shifts.

While the US held rates steady in H1, several APAC central banks cut rates more than expected, cushioning the regional growth resistance and widening positive yield spreads that are drawing institutional capital back to real estate.

Despite downward revisions to GDP expectations ( Asia Pacific growth is now forecast at 3.7%, down from 4.1% ), core economies like India, Japan, and South Korea showed strong resilience, fuelled by private consumption, surging tourism, and policy support.

Capital inflows

Investor interest remains concentrated in South Korea, Japan, and Singapore, with several large funds raised and capital deployment accelerating. India also saw increased yield compression expectations as falling interest rates and limited quality supply drew investor attention.

In a briefing, CBRE noted that yield performance remains bifurcated: office yields in Australia have flattened, while Greater China continues to see decompression, particularly in logistics. Meanwhile, Japan’s office and retail sectors are showing compression, reflecting sustained investor interest even after a modest rate hike.

Office leasing softened in Q2 due to trade-linked sentiment shifts. Yet demand remains anchored in flight-to-quality trends, with ESG-compliant and buildings with full suites of amenities leading leasing activity.

Tokyo is the standout performer: rents are forecast to rise over 10% in 2025 in the Japanese capital, driven by sub-2% vacancy and strong pre-commitments in new Grade-A stock. Meanwhile, India’s Tier-1 cities, especially Mumbai BKC ( Bandra Kurla Complex ), also show strong rent growth, supported by outsourcing and domestic occupier demand.

Conversely, Greater China’s office sector remains weak, with Shenzhen and Beijing facing persistent oversupply and soft demand.

Logistics and hotels

According to CBRE, sentiment among logistics occupiers has turned cautious, but demand remains stable, supported by domestic e-commerce and retail consumption, especially in India, Vietnam, and Japan.

In contrast, Singapore, China, and Australia ( ex-Perth ) saw downgrades due to rising vacancy and subdued demand. Still, the medium-term outlook remains positive, with a more flexible landlord stance encouraging leasing.

Retail leasing remains conservative amid soft consumer sentiment, though tourist-fuelled growth has supported performance in Japan and Mumbai. Prime core locations remain preferred, ensuring low vacancies despite limited rental growth, but China’s Tier-1 markets and Taiwan continue to lag.

The hotel sector, meanwhile, continues its rebound, with average daily rate ( ADR ) growth across most markets, led by Japan ( +16.9% y-o-y ) and South Korea. Occupancy is improving steadily, though Thailand and China face challenges due to safety concerns and weak domestic spending.