Global real estate investment to breach US$1t by 2026

The Asia Pacific region will be a key investment driver and outperform global peers.

Savills Research unveils its 2025 Global Real Estate Outlook, spotlighting Asia Pacific’s robust growth and a pathway to full investment recovery by 2025. Outlook for Singapore will parallel global growth with sustainability, lifestyle and AI trends to further impact the office, retail and industrial sectors.

Globally, a resurgence in investment to pre-pandemic levels is anticipated by 2026, spurred by a stabilisation in interest rates and improved investor confidence. Savills Research forecasts global real estate investment turnover to rise 27% to US$952 billion in 2025. By 2026, global investment activity is expected to surpass the US$1 trillion mark for the first time since 2022.

The prime office and industrial sectors will lead the recovery, with expectations of moderate growth in capital values and rents across major markets. Sustainability initiatives remain at the forefront, with demand for green-certified office buildings and energy-efficient industrial spaces rising.

Paul Tostevin, Head of World Research, Savills explains, “A backdrop of change will continue to define markets in 2025, but for the first time in five years, there is more stability, and perhaps more conviction, in the economic outlook. This will put markets on a surer footing, boosting investment and activity. As global investment and activity returns to more sustained growth, the industry must adapt to evolving legislative landscapes and geopolitical dynamics, while ensuring sustainable and socially responsible development to meet the needs of a changing world.”

Tourism, the living sectors, and industrial and logistics including data centres will drive momentum in the Asia Pacific (APAC) region next year.

The region continues to outperform global peers, with real GDP growth exceeding that of the US and Europe. Investment volumes reached US$108.7 billion in 2024 (Q1-Q3), reflecting a 4% year-on-year increase. Institutional investment in the region during the first three quarters has already seen notable growth, surpassing 2023 levels, in key markets such as Singapore (74% YoY), South Korea (71% YoY) and Australia (63% YoY).

Office markets in APAC remain highly attractive, commanding 37% of total regional real estate investment, significantly higher than the global average of 23%. Singapore ranks among the top cities in China, South Korea and Japan for office utilisation with rates exceeding 90%, reflecting a resumption of pre-pandemic working models.

Most Grade A office markets will favour tenants in 2025, with leasing demand driven by the technology, finance, and professional services sectors. The Singapore market will be fairly favourable to occupiers with companies in the professional services sector pushing demand.

APAC also remains a stronghold for green-certified office spaces, steered by corporate ESG mandates. APAC occupiers are placing more emphasis on ESG matters.

The retail landscape in the region shows promise, after prime retail markets bottomed out in 1H/2023. Healthy lifestyles and outdoor activities, as well as the growing trend of ‘interest-driven’ consumption and the ‘blind box’ concept, are driving expansion activities. Retailers are turning to hybrid retail formats and suburban developments to cater to evolving consumer preferences.

Simon Smith, Regional Head of Research & Consultancy, APAC at Savills comments, “Preconditions exist for a recovery in real estate investment interest in Asia Pacific next year while longer term structural trends should support values in growth markets including India and Southeast Asia. How global themes play out across the region and who is best positioned to take advantage of them will ultimately determine winners and losers.”

In the Singapore office market, there had been a slight recovery in activity levels with more leases being concluded. Rents for CBD Grade A space here are likely to hold firm in 2025 through 2026.

Singapore, being a hub and gateway to the region, is a favourite destination for new overseas brands. The more prime retail developments will continue to see healthy demand, keeping rental levels firm.

In the industrial sector, notwithstanding cost pressures, demand remains strong in key sectors like logistics, advanced manufacturing, healthcare and data centres, which should help stabilise rental rates and capital values in the long term.

Alan Cheong, Executive Director of Research & Consultancy, Savills Singapore adds, “Real estate for Singapore in 2025 is expected to parallel the global narrative. Office tenants are increasingly adding greater weightage to the green agenda while for retail, lifestyle and pet friendly oriented malls become even more popularised. On the industrial front, greater AI adoption is leading to more data centres being built here and/or data centre service providers are using Singapore as a springboard to scour for sites to build the infrastructure.”