Asia Pacific real estate investment market dips 6% y-o-y to US$71.9 bil in 1H2025: Colliers

Global trade swings and economic headwinds have dampened real estate investment in the Asia Pacific region in the first half of the year, with volumes falling 6% y-o-y to US$71.9 billion ($92.2 billion), according to a Colliers market report.

However, the report notes that despite the market slowdown in 1H2025, easing interest rates and stabilising inflation across most major markets in the region signal a mood of cautious resilience among investors.

“Despite global uncertainties, Asia Pacific’s real estate markets are showing remarkable resilience,” says Alex Worthington, Director, Colliers’ Key Client Account Management and Investor Intelligence, APAC Capital Markets. “We’re seeing a clear shift in investor strategy towards quality, diversification, and long-term value”.

The share of domestic and foreign capital share across nine major markets in the Asia Pacific in 1H2025. (Graphic: Colliers)

The consultancy notes that most central banks in the Asia Pacific region are approaching the end of their rate cut cycles, and that interest rates are expected to stabilise gradually in the coming quarters.

In 1H2025, office assets were the asset of choice, drawing in US$25.9 billion (36%) of total investment volumes, followed by industrial and logistics properties at US$13.3 billion (19%), and retail assets accounting for US$12.5 billion (17%).

“Retail is a bright spot across Asia Pacific, emerging as the most traded asset class in Australia. In India, too, retail, along with mixed-use assets, led investment volumes,” says Lachlan MacGillivray, managing director of Retail Capital Markets, Asia Pacific, at Colliers. The upswing comes amid improving consumer sentiment and renewed investor interest in income-generating retail assets, particularly in central and secondary business districts of major APAC cities, he adds.

The report also shows that investments into retail assets increased 13% y-o-y in 1H2025, and it was the most traded asset in Australia. In India, retail and mixed-use properties led investment volumes in the country. The upswing reflects improving consumer sentiment and renewed investor interest in income-generating retail assets, especially in central and secondary business districts of major Asia Pacific cities.

Investment breakdown by asset class in the Asia Pacific region in 1H2025. Graphic: Colliers

Investments in the office sector also grew 5% y-o-y, with South Korea and Japan driving the majority of investments during the period. In Japan, the office market attracted a total of US$8.8 billion, which marked a yearly increase of 13% in 1H2025. However, declines in the residential (-27% y-o-y), hospitality (-20% y-o-y), and industrial (-38% y-o-y) sectors over the same period dragged Japan’s overall investment volume to US$16.1 billion and a decline of 7% y-o-y in 1H2025.

At the same time, South Korea saw office investment volume clock in US$9.9 billion and increased 61% y-o-y over the same period. The country recorded a total real estate investment volume of US$16.3 billion, which marked a positive 20% y-o-y change. Colliers notes that domestic institutional investors are resuming investment activity, which will pave the way towards improving overall market liquidity.

Meanwhile, Singapore’s real estate investment market performed well over the first six months of this year, recording a total investment volume of US$10.8 million, which is a yearly increase of 6%. Last year, the investment market recorded a total investment volume of US$21.9 billion.

The residential market attracted the largest proportion of investment capital, amounting to US$4.7 billion, followed by retail and mixed-use assets (US$2.1 billion), and industrial and logistics properties (US$1.4 billion)

The performance of six key sectors in Singapore in 1H2025. (Graphic: Colliers)

Three major deals dominated Singapore’s investment market in 1H2025. The first was City Development’s (CDL) S$834 million divestment of its 50.1% stake in South Beach, a mixed-use development along Beach Road, to Malaysian partner IOI Properties in June.

In March, Frasers Centrepoint Trust announced the acquisition of the South Wing of Northpoint City, a suburban shopping mall in Yishun, for S$1.17 billion. Bain Capital also acquired a purpose-built workers’ dormitory from Blackstone for S$750 million in February.

Colliers projects that the investment market could record around US$29 to 32 billion for the whole of 2025.

Looking at the Asia Pacific region as a whole, Colliers expects that domestic capital will likely play a pivotal role in driving up investment volumes in 2H2025. Core assets will continue to anchor deals, but it notes that there is a growing appetite for alternative assets such as data centres, life sciences, and student housing.

“Investors are recalibrating their portfolios to align with evolving market dynamics,” says Lucy Mallick, Colliers’ International Capital Lead, Australia. She anticipates a gradual rebound in investment activity that will be supported by a more stable macroeconomic backdrop.