Quality assets underpin Asia Pacific investment as cap rates hold steady

Seoul saw the biggest cap rate movement in the region.

Cap rates across Asia Pacific remained broadly stable in the second quarter of 2026 as investors focused on selective growth opportunities amid uncertain economic conditions, according to Colliers' Cap Rates Report Q2 2026.

Colliers said resilient occupier demand and continued investor interest in high-quality assets helped support cap rates, despite differing inflation, financing costs and economic growth trends across the region.

Seoul recorded the most significant cap rate movement during the quarter, while office was the sector with the greatest degree of change across Asia Pacific. Australia, Singapore, India and Tokyo continued to benefit from resilient occupier fundamentals and investor demand, while repricing remained evident in parts of China, Hong Kong, Korea and the Philippines.

"Investors are becoming increasingly selective in how they deploy capital across Asia Pacific," said CK Lau, managing director, valuation and advisory services, Asia, at Colliers. He said occupier fundamentals remained supportive in many markets, with sustained demand for high-quality assets offering strong income characteristics, particularly where supply is constrained.

In office markets, quality remained the key theme. Australia's sector was supported by sustained leasing activity, limited new supply and rental growth for premium-grade buildings, with smaller occupiers also contributing to improving vacancy. Strong occupier demand continued in Tokyo, Bengaluru and Singapore, while stabilising leasing conditions in Hong Kong helped moderate further yield expansion. In China, investors remained focused on prime assets as new supply and elevated vacancy weighed on wider market conditions.

Retail performance was more market specific. Tokyo benefited from inbound tourism, healthy consumer spending and low vacancy in premium districts, while a modest recovery in Hong Kong helped slow cap rate expansion. Singapore remained among the region's strongest retail markets, supported by resilient luxury spending, limited supply and solid occupier fundamentals. In Australia, investment momentum improved for neighbourhood and regional shopping centres, supported by resilient non-discretionary spending.

Industrial markets were generally resilient, with healthy occupier demand and continued investor interest in logistics assets. Australia recorded US$2.27 billion in industrial transactions year to date, with Sydney and Melbourne attracting owner-occupier and local private capital. Leasing activity also improved as confidence in interest rate stability strengthened.

Colliers said industrial demand remained resilient in India, Singapore and New Zealand, while Tokyo's recent logistics supply continued to be absorbed, supported by e-commerce operators and third-party logistics providers.

Lau said that as economic conditions diverge across the region, local market fundamentals and asset quality will play an increasingly important role in investment decisions.