Singapore’s cap rates across all sectors have remains stable due to its stable investment environment. (Photo: Samuel Isaac Chua / EdgeProp Singapore)
Singapore’s cap rates across all sectors have remains stable due to its stable investment environment with cap rate volatility remaining limited, according to Colliers’ Q1 2025 Asia Pacific Cap Rates report.
The consultancy’s latest paper monitored 19 key markets in the Asia Pacific (Apac) region and found that 12 remained steady in the first three months of the year.
In Apac, the report found that the sector with the most movement in rates was the industrial sector, which was supported by solid fundamentals and innovation despite oversupply in some markets.
Notably, Jakarta’s industrial market experienced the most compression in cap rates in the first three months of the year, rising to a high of 8% and a low of 7%, compared to Indonesia’s interest rate of 8.39%.
The drop was driven by higher property valuations which were in turn supported by strong investor demand, shifting expectations towards growth and stability and solid market demand from the e-commerce and electric vehicle industries.
South Korea’s logistic sector experienced a similar drop in cap rates for the same reason. Industrial property cap rates in Seoul fell to between 5% and 5.5% as optimism in the market rose in the first three months of the year.
Meanwhile, cap rates in Hong Kong’s retail and industrial sectors increased on the back of trade uncertainties. Sentiment in Hong Kong’s industrial sector weakened on the island even before the US imposed massive tariffs on China at the start of 2Q2025.
Capital values of retail assets in Hong Kong also took a downward turn as investors re-evaluated opportunities in the sector.
The office sector remained mostly stable, with Seoul seeing the largest drop in cap rates.
According to Colliers’ report, office spaces in the South Korean capital recorded stable vacancy rates and leasing activity amid limited supply, supporting property values. However, the increasing availability of assets has prompted investors to take a more selective approach.
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Most other markets found little q-o-q change.