Intelligent Investment
2025 Asia Pacific Real Estate Market Outlook Mid-Year Review
August 7, 2025 15 Minute Read
Executive Summary
Looking for a PDF of this content?
Explore our APAC Online Data Dashboard
2025 Asia Pacific Mid-Year Outlook Event Recording
The greater-than-expected shift in U.S. trade policy was the major surprise in H1 2025. Although April’s initial shock subsequently calmed after tariffs were lowered and several trade deals were signed, ongoing uncertainty continues to drag on regional economic and business sentiment. As a result, CBRE has revised down its 2025 GDP growth forecast for Asia Pacific from 4.1% to 3.7%.
While U.S. interest rates were unchanged in the first half of 2025, monetary policy in many Asia Pacific economies has turned more stimulative in response to weaker growth. Several central banks implemented more aggressive than expected rate cuts during the period. In Japan, the Bank of Japan (BoJ) may resume rate hikes before the end of the year after the country reached a deal in July with the U.S. on tariffs.
CBRE has upgraded its 2025 full year investment forecast to growth of 10% to 15% on the back of solid investor demand in markets such as Korea, Japan and Singapore. Strong fund raising activity and enlarging positive yield spreads in most markets are likely to provide ongoing support to investment, although yield performance will continue to diverge.
Office sentiment softened in Q2 2025, with most markets reporting a slower enquiries and decision-making. However, office leasing activity could pick up in H2 2025 amid stabilising business confidence and tighter return-to-office mandates. CBRE expects office leasing activity to be on par with that in 2024.
CBRE’s 2025 Asia Pacific Logistics Occupier Survey revealed a decline in optimism, with many tenants planning to right-size portfolios and restructure supply chains. However, logistics leasing volume is expected to remain steady, driven by landlords’ more flexible stance; resilient demand from domestic consumption-related firms and occupiers planning mid-to-long term expansion.
In the retail sector, weak consumer sentiment and subdued discretionary spending prompted retailers to be more cautious towards real estate planning in H1 2025. Retailers’ strong preference for prime core locations will ensure vacancy rates continue to decline but the pace of rental growth will remain mild.
Hotel Average Daily Rates (ADRs) continue to grow in most markets while occupancy is improving as hoteliers adopt different pricing and operational strategies to boost performance. Japan, Korea, Vietnam and India are set to lead Revenue Per Available Room (RevPAR) performance for the full year.
Table 1: Changes to 2025 Outlook
2025 Asia Pacific Mid-Year Outlook Event
Economy
Figure 1: 2025 GDP Growth Forecast Revisions (January vs. July forecasts)
Figure 2: Interest Rate Outlook - More Dovish Than Expected
Investment
Cap rate bifurcation persists
Revised yield forecast- Office yields in Australia have not shown material compression as had originally been anticipated at the start of the year, as investors remain cautious toward the strength of the office sector. However, yield expansion was seen in Melbourne and Perth in H1 2025. As a result, office yields in Australia are now expected to remain flat for the remainder of the year. On the flipside, logistics yields compressed in Sydney over H1 2025, in line with expectations.
- Greater China markets have recorded more yield expansion so far this year, especially in the logistics sector. A combination of large supply and subdued sentiment, exacerbated by U.S. tariffs on Chinese goods including small-value parcels, is contributing to a stronger logistics yield decompression forecast for mainland China and Hong Kong SAR.
- In Japan, despite an interest rate hike earlier in the year and some likelihood of a further increase later this year, investor interest remains robust, with yield compression still expected for offices. Even Tokyo retail yields are now showing signs of tightening. Greater Tokyo logistics is the lone exception, with yields decompressing given the weakening rental outlook.
- India now expects more yield compression than what was forecasted at the start of the year. This is due to interest rates falling by more than anticipated as well as a large pool of capital chasing a limited supply of assets.
- The yield outlook in Singapore and Korea remains largely unchanged. Mild compression in these markets is still expected on the back of falling interest rates and healthy investor appetite.
Figure 3: Yield Change Forecast Between End-2024 and End-2025 (previous vs. current forecast)
Source: CBRE Research, July 2025.
Office
Key changes to forecasts
Upgraded- Tokyo and Indian tier I cities are the current rental leaders owing to tighter availability of prime space and solid upgrading and expansionary demand.
- Tokyo will experience the largest upward rental revision, with growth projected to reach over 10% by year’s end, the highest annual gain in the past decade. This is due to extremely limited existing space and a healthy pre-commitment rate of 60% in Grade A projects due in 2026.
- The combined impact of robust demand from outsourcing and domestic occupiers as well as limited prime office stock in key submarkets of India’s tier I cities has led to strong rental growth. Despite high rents, Mumbai BKC is expected to outperform, with occupiers continuing to show expansionary interest.
- CBRE’s modest upward revision in rental forecasts for Seoul and Singapore is largely driven by supply constraints, as both cities continue to maintain some of the lowest office vacancy rates in the region.
Downgraded
- Rental growth has been revised down for most Pacific markets due to subdued leasing demand in H1 2025 amid slower economic growth. Auckland is expected to see a mild rental decline whereas growth momentum in Sydney, Brisbane and Melbourne has been further revised down. Supported by larger deals and continued flight-to-core demand in Australia, rental growth may regain momentum in H2 2025.
- Greater China markets will remain regional laggards, with further rental declines expected amid persistent supply pressure. Shenzhen landlords are highly accommodative, influenced by tariffs and tenant shifts to owner-occupied buildings. Office rents in Beijing may yet bottom-out in 2027 thanks to an easing supply pipeline, while rents in Hong Kong SAR’s core areas are stabilising amid relatively lower vacancy.
Figure 4: H1 2025 YTD and 2025F Asia Pacific Office Grade A Rental Forecast
Source: CBRE Research, July 2025.
Logistics
Key changes to forecasts
Upgraded- Indian markets continue to thrive despite the challenging global logistics environment. Increasing demand from domestic e-commerce, rising land values, and new supply of investment-grade assets have pushed rents up and beyond previous expectations in Hyderabad, Chennai and Pune.
- Overall logistics rents increased in Vietnam (Southern Region), with supply dipping as warehouses are converted to factories, leading to lower vacancy. In the North, logistics rents are expected to rise due to retail-driven demand for storage space.
- Greater Tokyo and Greater Osaka have been given milder rental upgrades as supply starts to ease in H2 2025, along with healthy absorption.
- The rental forecast for Perth has been upgraded, supported by strong pre-commitments and solid leasing activity expected for H2 2025.
Downgraded
- Singapore rents fell slightly in H1 2025, falling short of early expectations due to surging completions and falling rents in older assets. However, healthy pre-leasing in new premium supply could help offset this trend in H2 2025, with forecasts downgraded to flat in 2025.
- In Australia, rental forecasts outside of Perth have been adjusted downward. Leasing activity is expected to moderate as demand normalises in major markets. Sydney and Melbourne are experiencing rising availability, with supply remaining elevated throughout the year. Brisbane’s forecast has been adjusted down amid softer demand.
- Rental forecasts for mainland China markets have been downgraded due to trade volatility and subdued cross-border e-commerce demand. In South China, vacancy in both Shenzhen and Guangzhou is expected to exceed double digits by year’s end due to combined supply of over 45 million sq. ft. expected for 2025-2026, more than 2.5x that of 2023-2024. Shanghai and Beijing have also been assigned further rental downgrades but the supply pipeline is set to ease in 2026.
Figure 5: H1 2025 YTD and 2025F Asia Pacific Logistics Rental Forecast
Source: CBRE Research, July 2025.
Retail
Key changes to forecasts
Upgraded- Mumbai’s stronger than expected rental growth was driven by selected premium shopping centres coupled with expansionary demand from local fashion brands and online retailers. Growth is expected to stabilise in the second half of 2025 as landlords remain concerned about retailers’ capacity to afford high rents.
- Tokyo Ginza saw mild growth in H1 2025 from the high base achieved in 2024. Rents are expected to register further gains due to competitive bidding for limited space. Outside Ginza, major tourist submarkets such as Shibuya and Omotesando/Harajuku have seen strong growth, with rents exceeding pre-pandemic levels.
Downgraded
- Limited supply and a growing population continue to underpin rental growth in Australian regional centres. However, Melbourne and Brisbane are expecting milder full year growth after weaker H1 2025 performance.
- Rental growth in the Hanoi CBD paused in the first half after achieving gains of 15% in 2024. However, further growth is expected in the near term when large scale new supply with higher asking rents enters the market.
- Taipei rental growth is forecasted to be limited as leasing demand is confined to tourist areas and locals prefer spending abroad.
- Auckland regional shopping centres are likely to see rental growth turn negative in the second half as weak domestic consumption and elevated unemployment weigh on performance.
- Rents in mainland China tier I markets will stay under pressure as landlords pursue tenant mix adjustments and new supply is completed.
Figure 6: H1 2025 YTD and 2025F Asia Pacific Retail Rental Forecast
Source: CBRE Research, July 2025.
Hotels
ADRs continue to improve; occupancy increases modestly
- While the rate of increase has slowed, ADRs continued to grow positively in most markets in H1 2025 on a local currency basis. This is highlighted by strong performance in Japan (+16.9% y-o-y) , where tourism inflows continue to set record highs with the Japanese Yen relatively weak compared to historic levels.
- Korea remains upbeat, with ADRs up 6.3% y-o-y as continued tourism growth supports hotel performance.
- Strong levels of supply in the back half of 2024 led Singapore ADRs to drop slightly y-o-y as new stock was absorbed. Occupancy has seen modest growth, with hotel general managers focusing on length of stay and limiting cost expenditures.
- After logging strong growth from 2022 to 2024, Australia has seen hotel performance stabilise as domestic demand normalises.
- Limited inbound tourist demand and weak domestic consumption have seen ADRs stagnate in mainland China, with occupancy levels dropping y-o-y. International hotel brands nevertheless continue to expand in this market. While ADRs have been flat in Hong Kong SAR, occupancy continues to grow, with general managers focusing on filling rooms rather than driving up rates.
- Fortunes have varied in Southeast Asia so far in 2025, with Vietnam’s hotel performance improving on the back of strong tourism arrivals. While rates have increased in Indonesia, this is in response to falling occupancy levels, particularly in Bali. After a solid 2024, Thailand has seen performance slip as mainland Chinese cancel bookings due to safety concerns.
Figure 7: ADR Growth & Occupancy Change (% difference) – H1 2025 y-t-d vs. H1 2024 y-t-d
Related Mid-Year Market Outlook Insights
- Report | Creating Resilience
2025 China Office Market Outlook Mid-Year Review
July 18, 2025 6 Minute Read
- Report | Creating Resilience
2025 China Logistics Market Outlook Mid-Year Review
July 21, 2025 6 Minute Read
- Report | Intelligent Investment
2025 China Investment Market Outlook Mid-Year Review
July 22, 2025 6 Minute Read
- Report | Intelligent Investment
2025 U.S. Real Estate Market Outlook Midyear Review
July 30, 2025 10 Minute Read
While economic uncertainty tempers growth, fundamentals remain healthy with pockets of outperformance across the industry.
- Book | Intelligent Investment
UK Real Estate Market Outlook Mid-Year Review 2025
August 5, 2025 58 Minute Read
Welcome to our 2025 UK Real Estate Market Outlook Mid-Year Review; in which we look back and evaluate our expectations for 2025 made at the beginning of this year.
- Book | Intelligent Investment
European Real Estate Market Outlook Mid-Year Review 2025
August 7, 2025
Welcome to CBRE’s 2025 European Mid-Year Market Outlook. In this report, we revisit the predictions we made at the beginning of the year, assess their accuracy,...
Asia Pacific Real Estate Market Data Dashboard
Explore dynamic real estate data across all sectors
Use the Dashboard Data Subscription Service
Research Contacts
Business Contacts
Greg Hyland
Head of Capital Markets, Asia Pacific
Richard Stevenson
Managing Director, Head of Office Leasing, Advisory Services, Asia Pacific
Vivek Kaul
Managing Director, Head of Retail Leasing, Advisory Services, Asia
Michael Bowens
Managing Director, Head of Industrial & Logistics Leasing, Advisory Services, Asia Pacific
