Asia Pacific cap rates and investment activity to increase in H2 2023

Cap rates for all property types have increased in first half 2023 across most Asia Pacific cities, except for Japan and China, where interest rates remain stable, according to CBRE’s Q1 2023 Asia Pacific Cap Rate Survey, released May 18. And while Asia Pacific cap rates are expected to continue rising in the second half of this year, investment activity should pick up while cap rate adjustments help close the price gap between buyers and sellers, notes the report.

Despite strong real estate fundamentals, higher borrowing costs and an uncertain economic environment are likely to force cap rates upward by an additional 75 basis points to 150 basis points in the next six months. Cap rate expansion is expected to be most pronounced for core office and retail assets.

According to the survey, Japan is expected to lead the investment recovery in second quarter 2023, followed by China and Hong Kong in third quarter 2023 and Singapore, India and New Zealand in fourt