The Asia-Pacific property market is forecasted to experience a significant rebound in 2025.
According to the 2025 Global Investor Outlook report released by Colliers, investor confidence in the commercial real estate market is on the rise.
Following two years of stalled transactions, the market is projected to recover as inflation subsides, interest rates decline, and global economic conditions stabilize and improve.
By 2025, the global market is expected to diversify further in terms of asset classes and investor bases compared to 2024, according to pilar.id.
Positive Market Drives Investment
Favorable market conditions across various sectors are anticipated to attract a growing number of international and local investors in 2025.
Chris Pilgrim, Managing Director of Global Capital Markets at Colliers Asia-Pacific, highlighted the opportunities presented by these conditions:
“Strong economic fundamentals and diverse attractive assets will entice both local and international investors into the Asia-Pacific property market next year,” he stated, as quoted by propertiterkini.com.
Key trends for 2025 investment strategies in Asia-Pacific include:
- 69% of respondents plan to allocate more than 30% of their total global assets to real estate over the next five years.
- 61% intend to invest in industrial and logistics sectors, offices, and multi-family/build-to-rent properties.
- 61% plan to focus on core or core-plus CBD office assets
- 90% believe ESG-compliant (Environmental, Social, and Governance) office properties will command premium values in the next three years.
Pilgrim also emphasized the logistics sector as a primary investment strategy, with growing demand for data centers, last-mile logistics, and cold storage facilities in markets like Japan, Australia, and South Korea.
Indonesia’s Property Market Outlook
Mike Broomell, Managing Director and Head of Capital Markets & Investment Services at Colliers Indonesia, noted that Indonesia’s property investment trends align closely with other Asia-Pacific markets.
“The strongest asset classes in Indonesia for investors are industrial and logistics properties, along with data centers,” Broomell said, as reported by realestat.id.
The residential market remains active, supported by historically low mortgage rates and government incentives like the removal of VAT on home purchases. Additionally, Indonesia’s new government has proposed eliminating buyer taxes on residential property purchases to address the housing affordability crisis.
“Office occupancy rates and rental prices have hit bottom, presenting attractive investment opportunities,” Broomell added, as quoted by propertiterkini.com.
Colliers predicts that Indonesia’s residential property market will remain vibrant and promising.
Property Optimism in 2025
Several global dynamics are expected to influence the overall property market in 2025:
- Market Recovery Momentum: Lower interest rates in 2025 are anticipated to boost investor confidence and market activity.
- Narrowing Price Gap: The valuation gap between buyer and seller expectations is shrinking, facilitating larger transaction volumes.
- Focus on Prime Assets: High-quality properties in prime locations continue to attract investors, while secondary markets face more challenges.
- Demand for Sustainable Assets: ESG-compliant assets, especially in office and logistics sectors, are becoming a key focus for investors.
Luke Dawson, Head of Global Capital Markets at Colliers, stressed the importance of long-term planning.
“Now is the time for investors to prepare their long-term strategies. We’re seeing positive momentum as asset values stabilize, paving the way for stronger fundraising and increased transaction volumes,” he said, as quoted by pilar.id.
Growing Demand for Serviced Apartments in Jakarta
Serviced apartments have gained popularity in Jakarta, driven by a shift from business to family leisure use. According to Colliers’ Q3 2024 report, two-bedroom units are the most sought-after due to their privacy and spaciousness compared to hotels.
Outside Jakarta’s CBD, rental prices for serviced apartments have slightly adjusted, influenced by promotional offers from new projects. This trend signals a bright future for Jakarta’s serviced apartment sector, driven by growing demand from the expanding middle class and foreign direct investment (FDI).
The adaptability of serviced apartments to cater to both short-term and long-term accommodation needs makes them an attractive choice amid a dynamic property market.
Challenges and Long-Term Prospects
Despite the optimism, the Asia-Pacific property market faces challenges such as limited supply of high-quality assets, particularly in sectors like senior living and life sciences. Additionally, high construction costs deter investors from developing new assets.
In the long term, however, these sectors hold immense potential. Demographic shifts, population growth, and the increasing demand for healthcare infrastructure are expected to drive sustained demand.
Sources: PropertiTerkini.com, RealEstat.id, Pilar.id
Image source: Julia Volk (via Pexels)