CBRE survey finds capital markets activity accelerating across much of the region, even as investors turn more cautious, selling intentions increase and demand shifts toward premium offices and alternative property sectors.<\/p>\n
Asia Pacific commercial real estate investment is gaining momentum, but rising interest rates and escalating development costs are creating a more cautious investment environment, according to a new survey by CBRE Group.<\/p>\n
Regional real estate investment volume increased 24% year over year during the first three quarters of 2026, supported by particularly strong activity in Singapore, Australia, Hong Kong and India. However, the improving transaction environment is masking a growing divide between investors willing to deploy capital and those increasingly inclined to sell.<\/p>\n
CBRE’s Q3 2026 Asia Pacific Cap Rate Survey, conducted between September 11 and October 2 and based on 128 responses from the firm’s capital markets and valuation professionals, found that selling intentions strengthened considerably during the third quarter.<\/p>\n
The percentage of respondents reporting stronger selling intentions increased to 35%, compared with 21% six months earlier. Meanwhile, the share reporting stronger buying intentions declined to 20% from 29%.<\/p>\n
The shift reflects a more defensive investment climate as central banks face renewed inflationary pressures and borrowing costs remain a significant concern. CBRE found that the net balance of investor risk appetite declined 30 percentage points from its Q3 2025 level, while the proportion describing risk appetite as “about the same” fell to 45%, from 62% a year earlier.<\/p>\n
Despite the more cautious sentiment, regional investment activity remains unevenly distributed, with Singapore recording the strongest growth.<\/p>\n
Investment volume in Singapore surged 133% year over year through the first three quarters of 2026. Australia followed with 67% growth, while Hong Kong SAR advanced 48% and India increased 38%. Japan and South Korea recorded more modest gains of 2% and 1%, respectively. Mainland China was the exception, with investment volume declining 8%.<\/p>\n
The divergence is also evident in investor intentions. Hong Kong stands out as a particularly attractive market, with 75% of respondents reporting stronger buying intentions. Mainland China experienced the sharpest reversal, with its net balance of buying minus selling intentions moving from positive 36 to negative 27 percentage points.<\/p>\n
Interest Rates and Construction Costs Dominate Investor Concerns<\/strong><\/p>\n The cost of capital has emerged as the industry’s most pressing challenge. Some 68% of respondents identified a potential interest rate hike as a major concern for the coming six months, compared with 25% in the previous survey.<\/p>\n Elevated construction and labor costs ranked second, cited by 65% of respondents, up from 42%. Geopolitical concerns, meanwhile, declined substantially to 35% from 65%, although they remain a significant investment consideration.<\/p>\n The widening gap between buyer and seller expectations, which increased to 35% from 23%, also suggests that pricing disagreements could constrain transaction activity despite improving market liquidity.<\/p>\n Financing availability remains relatively supportive. Overall, 74% of respondents characterized debt financing for completed, stabilized properties as either very or fairly easy to obtain. Nevertheless, 58% expect interest rates to increase by up to 50 basis points over the next 12 months, while another 13% anticipate increases exceeding 50 basis points.<\/p>\n Grade A Offices Regain the Spotlight<\/strong><\/p>\n Investor interest is increasingly concentrating on higher-quality assets and selected alternative property sectors.<\/p>\n Grade A offices in core locations attracted the strongest interest among traditional property sectors, with 59% of respondents identifying them as an investment target, compared with 49% in the previous survey. Urban hotels experienced one of the largest gains, rising to 43% from 31%.<\/p>\n Institutional-grade logistics attracted interest from 27% of respondents, down from 37%, indicating a rotation in investment preferences away from some previously favored sectors.<\/p>\n Within alternative property investments, real estate debt led interest at 44%, followed by student housing at 43% and healthcare and life sciences at 39%.<\/p>\n The survey also highlights the continued importance of market-specific pricing. Indicative September 2026 Grade A office cap rates ranged from 2.0% to 3.0% in Tokyo’s core locations, compared with 7.5% to 8.25% in Bangalore.<\/p>\n Taken together, CBRE’s findings point to an Asia Pacific property market in transition: investment activity is recovering, but higher financing costs, construction expenses and more selective capital allocation are increasingly determining which assets and markets attract investor demand.<\/p>\n\n