Early signs of recovery emerge across APAC real estate markets

Colliers sees a cyclical shift as APAC cap rates stabilise.

Asia Pacific real estate markets are showing early signs of a cyclical shift, with cap rates holding steady across most sectors and investor sentiment gradually improving, according to Colliers.

In its Asia Pacific Cap Rate Report for Q4 2025, Colliers said the region has moved beyond a period of adjustment and is now entering a more stable phase, supported by early signs of renewed transactional momentum and improving investor confidence.

CK Lau, Managing Director, Valuation and Advisory Services, Asia at Colliers, said stabilising cap rates across most markets and sectors indicate that the region is “moving into a smoother, more stable phase,” with investors becoming more confident in the direction of travel.

Colliers noted that easing interest rates and strengthening fundamentals in several core markets are encouraging investors to shift from caution to active preparation, particularly in sectors with resilient underlying demand.

The report highlighted that Singapore continues to strengthen its appeal, supported by improving investment spreads and its position as a stable gateway market. In Australia, retail assets have continued to attract strong investment for a third consecutive year, while industrial markets in cities such as Sydney, Brisbane and Adelaide have benefited from sustained business expansion.

In New Zealand, market stability has been supported by low interest rates and ongoing infrastructure investment, while India continued to post strong performance across office, retail and industrial sectors.

Elsewhere, South Korea recorded a record year of office investment led by activity in Seoul, and Hong Kong SAR saw renewed interest in premium office assets driven by financial and listing activity from mainland firms. In China, investment activity remained cautious and largely end-user driven, though prime retail assets in major cities remained resilient. Taiwan also remained stable, with owner-occupiers driving much of the industrial transaction activity.

Across sectors, Colliers said office markets such as Sydney, Tokyo and Seoul showed improving sentiment amid limited new supply, while retail performance remained supported by high occupancy and tourism-led demand in select gateway cities. Industrial real estate continued to be one of the region’s most resilient segments, underpinned by logistics demand in Australia, stable absorption in Tokyo and increased end-user activity in Hong Kong.

Mr Lau added that while Q4 2025 was characterised by steady cap rates, the broader macroeconomic environment is shifting more positively, with easing interest rates, moderating inflation and improving activity in key gateway cities helping to support a more constructive outlook for 2026.