A more selective second half looms for Asia Pacific property markets
Higher rates and geopolitical uncertainty may concentrate capital in prime assets and markets with limited supply and stronger rental growth, widening performance gaps elsewhere.
Asia Pacific commercial real estate investment rose 27% year on year in H1 2026, but CBRE expects transaction momentum to moderate in H2.
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Find out why real estate investment is expected to moderate.
Asia Pacific's economic growth outlook has been upgraded, but commercial real estate investment is expected to become more selective in the second half of 2026 as higher interest rates and geopolitical uncertainty reshape investor priorities, according to CBRE's 2026 Asia Pacific Real Estate Market Outlook Mid-Year Review.
CBRE has raised its full-year Asia Pacific economic growth forecast from 3.9% to 4.3%, citing robust demand for artificial intelligence-related products and semiconductors. Australia is an exception, with its growth forecast downgraded amid rising interest rates. Several markets, including Australia, South Korea and India, moved into rate-hike cycles in the first half, with the potential for another increase in H2.
Commercial real estate investment across Asia Pacific rose 27% year on year in H1 2026. CBRE expects transaction momentum to moderate in H2, with investors concentrating on markets offering stronger rental growth prospects, including Tokyo, Sydney and Brisbane. Yield expansion is now expected across most major sectors in Australia and Hong Kong SAR, as well as Greater Seoul logistics.
Singapore is a notable exception, with CBRE upgrading its outlook on the back of stronger capital market conditions and sustained investor demand.
Office demand remains concentrated on prime space
Office markets across major gateway cities continued to experience tight supply and persistent flight-to-quality demand in H1. CBRE said most mature markets delivered stronger-than-expected rental growth, prompting upward revisions to full-year forecasts, although growth is expected to moderate in H2.
Tokyo is forecast to deliver another year of double-digit rental growth, while Hong Kong SAR's office recovery has exceeded expectations as financial-sector demand strengthens. In Shanghai's core districts, rental declines are expected to stabilise as new supply tightens.
Logistics market favours modern assets
Logistics demand remained resilient, but CBRE identified a widening performance gap between prime and secondary properties. Occupiers are expected to continue favouring modern, well-located facilities in supply-heavy markets such as mainland China, Australia and India.
A shrinking regional supply pipeline from 2027 should provide further rental support. CBRE upgraded the rental outlook for Greater Tokyo on the back of broad-based domestic demand, while maintaining a mixed view for India and Australia due to softer expansion demand and supply pressure respectively. Rental forecasts for mainland China and Hong Kong SAR were downgraded amid elevated vacancy and more cautious occupier sentiment.
Retail and hotels offer selective opportunities
Limited new retail supply and strong demand for prime space supported rental growth across most markets in H1, a trend CBRE expects to continue. New-to-market Asian brands and experiential concepts are expected to support demand, with Tokyo Ginza's rental outlook upgraded because of tight availability.
India's core markets are still recording rental growth, although at a modest pace, while uneven labour market conditions are expected to weigh on Australia. Hong Kong SAR and Taiwan face weaker rental prospects because of softer non-core leasing demand and pressure on retailer profitability.
In hotels, rising average daily rates helped lift RevPAR across Asia Pacific during H1, although occupancy remained uneven because of lower flight capacity and higher fuel costs. Vietnam and South Korea outperformed on strong visitor arrivals, while the Maldives was affected by disruptions to Middle East aviation routes.
CBRE expects hotel ADRs to continue rising as higher construction costs constrain new supply. Events and concerts are also expected to become increasingly important in generating demand spikes and supporting hotel performance during traditionally weaker periods.
Overall, CBRE's mid-year outlook points to a more selective second half, with investors and occupiers likely to favour markets and assets backed by structural demand, limited supply and stronger rental growth prospects.