The Asia Pacific (APAC) real estate market is witnessing renewed investor interest as geopolitical tensions ease and interest rate outlooks become clearer, according to a recent report by Savills. Despite subdued transaction volumes in the second quarter, the market is expected to gain momentum towards the end of the year, driven by increased visibility and confidence among investors.
Artificial intelligence (AI) continues to play a significant role in the region’s capital markets, particularly in Taiwan and Korea, where technology stocks are seeing strong gains. This has led institutional investors to rebalance portfolios towards private assets such as infrastructure, private equity, and real estate, with improved pricing visibility and attractive valuations supporting increased allocations.
Asset conversion strategies are emerging as a key theme in APAC markets, particularly in developed regions like Hong Kong, Australasia, Korea, and Japan. These areas, characterised by older building stock, present opportunities for converting ageing office and hotel assets into rental housing, co-living spaces, and senior living facilities. The demand for such conversions is driven by stronger occupier demand in the living sectors compared to commercial spaces.
The data centre landscape in APAC is also evolving, with new facilities increasing in size to meet the demands of hyperscalers and AI workloads. However, access to power remains a primary constraint, influencing where capacity can be delivered. Larger projects require significant capital and early power access, favouring major operators over smaller developers.
In Korea, the living sector is seeing a shift in interest towards senior living, as the number of single-person households headed by individuals over 75 is projected to rise significantly. This demographic change is expected to redirect capital from youth rental markets to aged care facilities.
Hong Kong’s real estate market is showing signs of recovery, with residential markets rebounding and office sector declines slowing. The correction in asset values has opened up new strategies for asset repurposing, attracting capital from both equity and credit perspectives. As sentiment improves, the market is poised for rapid changes, with opportunities for investors to capitalise on discounted assets.
