The Asia Pacific (APAC) real estate market is set for dynamic changes in 2025, with significant developments across office, logistics, industrial, and capital markets sectors. Driven by varying economic trajectories and strategic adjustments, the region is poised for growth despite a complex global economic environment.
Dr. Dominic Brown, Head of International Research at Cushman & Wakefield, shared his outlook for the region: “The Asia Pacific economy is expected to grow at 3.7% in 2025, driven by strong performances in India and Southeast Asia. The region continues to showcase diverse economic trends, with inflation control being a central theme. Central banks are adjusting interest rates differently across the region, with emerging markets like India facing persistent inflation challenges, while more developed economies like Australia and Japan have seen better inflation control. Despite these differences, the overall outlook for the region remains positive, with a resilient real estate market poised for growth.”
Here are some key highlights from the report:
Office Market
The APAC office market is expected to remain strong, with demand averaging 75 million square feet (msf) annually between 2025 and 2029. However, new supply exceeding 100 msf over the next three years could push regional vacancy rates to nearly 20%.
Demand: India will continue to be a major driver, with cities like Bengaluru and Hyderabad leading the charge. The region is forecast to absorb 72 msf of office space in 2024, increasing to an average of 75 msf annually from 2025-2029.
Supply: A significant increase in supply is expected, with 121 msf of new office space anticipated to enter the market in 2025. Key markets like Shanghai, Bengaluru, Tokyo, and Shenzhen will see notable expansions.
Vacancy and Rent: Vacancy rates are projected to rise, particularly in major markets. Office rental growth is expected to be moderate, averaging around 2% annually, with variations between different markets.
Logistics and Industrial Sector
The logistics and industrial sector has faced challenges due to economic slowdowns and geopolitical uncertainties, leading to normalization after a period of rapid growth. However, with accelerating economic growth and expected interest rate cuts, occupier demand is forecast to improve, supporting rental growth in key markets.
Demand and Supply: Occupier demand for logistics and industrial space has slowed but is expected to pick up in 2025. Growth in markets such as Australia, India, and parts of Southeast Asia will drive rental increases.
Vacancy and Rent: Vacancy rates have increased in most markets, but rental growth is expected to stabilize region-wide, with the exception of Hong Kong and Shenzhen, where some rental decline may occur.
Capital Markets
The investment market in APAC is showing signs of recovery, with investment volumes expected to rise in 2025. While property values are expected to remain stable, asset-level trends may differ across regions.
Investment Volumes: The rolling annual investment volume for stabilized assets reached USD 153 billion by Q3 2024, up from USD 146 billion in Q4 2023. Investment volumes are projected to increase further in 2025, potentially recovering around half of the peak-to-trough decline, with an estimated USD 200 billion in investments.
Pricing Stability: The bid-ask spread between vendors and purchasers has narrowed, signaling a period of price stability. Capitalization rates are expected to remain steady across most of the region.
Overall, the APAC real estate market is primed for growth in 2025, with diverse economic and sector-specific dynamics driving demand and influencing supply. Despite global uncertainties, key markets such as India, Southeast Asia, and parts of developed economies are expected to lead the way in driving positive changes within the real estate sector.
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