Asia Pacific real estate: An outlook on growth opportunities in the build-to-rent and logistics sectors

The Asia Pacific real estate market is experiencing a period of adjustment, with high interest rates continuing to suppress investment volumes across the region. According to industry analysts, the trend of asset repricing has advanced, with further price corrections anticipated throughout the year. Notably, capitalisation rates are expected to peak in the near term before potentially easing in 2025, contingent upon relaxed monetary conditions.

In light of these market dynamics, DWS has highlighted several investment themes that could offer promising growth opportunities. Among these, the Residential Built-to-Rent sector in Australia is gaining attention, driven by a housing shortage that supports rental growth. Additionally, South Korea’s debt strategies present lucrative avenues for alternative capital to alleviate credit market restrictions. In Japan, investors are advised to engage in portfolio optimisation by divesting non-strategic assets and reallocating capital towards more promising ventures.

Investors are also encouraged to explore regional value-add opportunities, such as tactical investments in repriced office and logistics assets, as well as asset repositioning strategies. Moreover, selective investments in higher-risk operational real estate and emerging markets are expected to yield higher returns.

The report further delves into economic and sector-specific updates, outlining the current landscape and future outlook. Financing costs across several APAC countries remain elevated, influencing lender preferences and market opportunities. Among various sectors, the office leasing activity presents a mixed picture, influenced by macro-economic uncertainties and varying regional dynamics. Meanwhile, prime logistics assets continue to exhibit strong rental performance, particularly in markets with limited supply.

The residential and hotel sectors in the Asia Pacific also demonstrate significant growth momentum, with multifamily and built-to-rent markets, especially in Australia, projected to offer robust rental growth opportunities in the near future.

Finally, the strategic outlook underscores ongoing investment trends, recommending a cautious yet opportunistic approach to navigate the shifting real estate landscape in the Asia Pacific. With investment risk appetites expected to recover as interest rate pressures subside, the coming years may present valuable opportunities for strategic asset allocation and portfolio optimisation in response to emerging market conditions.