Article

Why APAC real estate deserves a fresh look

31 July 2025
Catherine Chen
Catherine Chen
Director, Asia Pacific Real Estate Research
David Chao
David Chao
Global Market Strategist, Asia-Pacific
Fog,Lujiazui,Shanghai,China,East Asia

As global markets navigate heightened geopolitical tensions and economic uncertainty, institutional investors are increasingly seeking resilient, growth-oriented opportunities. The Asia Pacific (APAC) real estate market stands out as a potentially compelling destination, offering a distinct combination of macroeconomic strength, policy support, and portfolio diversification benefits.

A region poised for growth

The APAC region is projected to contribute over 60% of global GDP growth in 20251, with its total GDP expected to be nearly 50% larger than the US by 20341. This economic momentum is underpinned by proactive monetary and fiscal policies across key markets such as China, Korea, and Australia.

Figure 1: Nominal GDP Projections (USD Trillions)

Source: Oxford Economics as of  April 2025

As the US dollar weakens and disinflationary pressures rise, APAC central banks are easing rates—creating a favorable environment for real estate investment.

Structural shifts driving demand

The region is undergoing a transformation from goods-based to services-led growth, supported by rapid digitalization and AI adoption. This shift is reshaping real estate demand across sectors—from commercial and residential to logistics and data centers.

Figure 2: Nominal goods and services trade in Asia Pacific (2015–2025)

Source: Data are estimated by ESCAP (United Nations Economic and Social Commission for Asia and the Pacific), based on WTO annual merchandise and commercial services data (accessed November 2024). Data from 2024 onwards are estimated by ESCAP, using EIU database for selected economies. Note: f indicates forecast.

Services now employ over half of Asia’s workforce, up from just 22% in 19902, driving demand for office, residential, and hospitality assets.

Diversification and capital flows

Cross-border capital flows into APAC real estate have surged, with transaction volumes up 125% between 2009–2014 and 2020–2024.3 Improved market transparency and lower return correlations with Western markets enhance APAC’s appeal as a diversification play.

  • Japan, Korea, and Australia show particularly low intra-regional return correlations.
  • Senior living and data centers in Korea and Australia are among the most attractive sectoral opportunities.

Attractive valuations and yield spreads

APAC real estate valuations remain below peak levels, with cap rate spreads in markets like Japan and Australia offering attractive risk-adjusted returns. As interest rates decline and bond yields stabilize, the region is well-positioned for a capital value recovery.

Conclusion

With resilient economic fundamentals, evolving trade dynamics, and sector-specific opportunities, APAC real estate presents a timely and strategic investment opportunity for institutional investors. Invesco may consider value-add and opportunistic strategies, as well as real estate debt in high-rate markets, particularly well-suited to this phase of the cycle.

For the full analysis, read “Why APAC Real Estate Now?”

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  • Footnotes

    1 Source: Oxford Economics as of April 2025.

    2 Source: IMF Asia’s Next Growth Frontier, March 2025.

    3 Source: (LHS) MSCI, April 2025; (RHS) JLL, LaSalle, 2024.

    Investment risks

    The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

    Important information

    This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security, or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.

    Data as at July, 2025, unless otherwise stated. Views and opinions are based on current market conditions and are subject to change. 

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