Business confidence is rising across Asia Pacific despite a  challenging economic landscape, with Colliers’ latest cap rates report finding the retail sector was  the key driver of movements in cap rates in the last quarter.  

Colliers’ Q4 2024 APAC Cap Rates report found consumer spending surged during the Q4 festive  season, benefiting the retail sector in various markets including Auckland, China, Hong Kong,  Bangkok and Bengaluru. Geographically, Auckland saw the most movement in cap rates last  quarter, particularly in the retail and industrial sectors. 

According to Colliers, interest rates are declining in many APAC markets, with further reductions  anticipated, though the pace may slow in 2025. 

“Amidst economic challenges, resilient business confidence in some markets is emerging,  supported by the stabilisation of interest rates across the region,” CK Lau, Colliers’ Managing  Director of Valuation & Advisory Services | Asia, said.

“As investment activities gain momentum across key APAC markets, we anticipate greater diversity in investor profiles in 2025.” 

The office sector faces challenges in some locations as new high-quality green buildings enter  the market, however, opportunities are emerging in core locations.

The industrial sector,  primarily driven by logistics and warehouse assets, is showing stable growth at a healthy pace;  while remaining cautious about abundant supply.  

Key report findings include: 

• Australia: Stabilisation of office and industrial yields in Q4 2024. 

• China: Increased investment activities and broader participation from investors in Q4. Retail landlords proactively adjusting portfolio leasing strategies and tenant mixes to  meet changing market demands, resulting in stable rental and occupancy rates. 

• Hong Kong: Investors mainly focused on assets under receivership or those being sold at  a loss, with active players being well-capitalised cash buyers, end-users, or a mix of both. 

• India: In Bengaluru, improved transaction volumes seen in organised retail, with rising  capital values in high street areas. Mumbai’s office supply has increased sixfold year-on year, providing more options for occupiers. 

• Indonesia: Older shopping centers in Jakarta, which have struggled since the COVID-19  pandemic, are now undergoing renovations and are expected to rebound in  performance. 

• Japan: In Tokyo, office cap rates have widened at the lower end, as CBD office rents  begin to rise and investment sentiment shows signs of improvement. 

• Korea: The Seoul office transaction market to remain stable, driven by interest rate cuts  and a recovery in institutional investment sentiment. Industrial transaction activity  anticipated to recover as new supply stablises and foreign investors view the sector as a  viable alternative. 

• New Zealand: In Auckland, industrial sales volumes declined in 2024, yet still accounted  for more than 50% of commercial and industrial property sales by volume and value. Auckland’s retail investment is predominantly focused on supermarkets and large format  retail premises, which are viewed as more stable investments. 

• Philippines: Manila office rents are trending downward, aligning with capital values,  which has resulted in stable cap rates. 

• Singapore: In Singapore, cap rates across sectors have remained stable due to the  favorable macroeconomic environment.

• Taiwan: Office supply in Taipei remains as forecasted, with occupancy around 95%.  Capital values and rents are increasing at a similar pace, resulting in a stable cap rate. 

• Thailand: Bangkok’s high-end shopping centers have experienced significant growth,  while lower-tier centers have seen modest increases. Growth is attributed to a rebound  in tourism. Prime industrial factory rents remain stable due to abundant supply and  strong market competition. 

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