Savills Research recently released its global outlook report for 2025 and found that Asia Pacific’s (Apac) real estate market continues to outperform its global peers. According to the report, Apac has seen its real GDP growth surpass that of the US and Europe, signaling a stable economic outlook for the region.
Paul Tostevin, Savills head of world research, says that for the first time in five years, there is more stability and conviction in the economic outlook, which will boost investment and activity in the real estate market.
In the first three quarters of 2024, Apac saw a 4% year-on-year growth in investment volumes, reaching a total of US$108.7 billion. The three markets that experienced the most significant growth in investment volumes were Singapore, South Korea, and Australia, with growth rates of 74%, 71%, and 63%, respectively.
Savills Research forecasts global real estate investments to rise 27% to US$952 billion in 2025, with global investment activity expected to surpass the US$1 trillion mark for the first time since 2022. The report also predicts that global investments will return to pre-pandemic levels by 2026, thanks to stabilizing interest rates and improved investor confidence.
Alan Cheong, executive director of research & consultancy at Savills Singapore, says that Singapore’s real estate market is expected to follow the global trend.
Meanwhile, Apac is expected to see a full recovery in real estate investments next year, driven by sectors such as tourism, living, and industrial sectors. These include logistics and data centers, which have seen a surge in demand due to the rise in e-commerce and digitalization. Simon Smith, Savills regional head of research & consultancy for Apac, says that while there are positive signs for a recovery in real estate investments in the region, the winners and losers will be determined by how global themes play out and who is best positioned to take advantage of them.
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The office sector remains a top choice for investors in Apac, accounting for 37% of total regional real estate investment in the first three quarters of 2024, significantly higher than the global average of 23%. Singapore, China, South Korea, and Japan are the top cities in the region for office utilization, with occupancy rates exceeding 90%. Additionally, Apac has a strong presence of green-certified office spaces, as ESG matters become increasingly important for office occupiers.
Cheong notes that Singapore has also seen a slight recovery in activity levels, with more leases being concluded and CBD Grade-A space rental expected to remain firm from 2025 to 2026. As a hub and gateway to the region, Singapore is a popular destination for new overseas brands. The prime retail sector also continues to see healthy demand, keeping rental levels stable.
Despite cost pressures, demand for industrial spaces remains robust in key sectors like logistics, advanced manufacturing, healthcare, and data centers. This should help stabilize rental rates and capital values in the long term. Cheong also adds that the growing adoption of AI is leading to more data centers being built in Singapore, with many service providers using the city-state as a base to explore potential sites for infrastructure development.
Tostevin concludes by stating that as the global economy and real estate market return to sustained growth, the industry must adapt to changing legislative landscapes and geopolitical dynamics while maintaining sustainable and socially responsible development to meet the needs of a changing world. Savills also predicts that Apac will remain a top investment destination for family offices worldwide, as the region continues to outperform its global peers.