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Asia Pacific Cap Rates Report | Q3 2023

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In the past quarter’s, the real estate sector has faced challenges in generating favourable returns relative to the cost of capital.

Interest rate had increased across most APAC markets, in the past quarters. The real estate sector has faced challenges in generating favourable returns relative to the cost of capital. Some capital flowed towards other investment assets, such as government bonds and fixed term deposits, to hedge against inflation, only in China where inflation remained at a comparatively low level. Overall property transaction volume across APAC remained low, and deals were generally smaller in size.

Key Highlights in Q3 2023:

Office Sector

  • In Auckland, there has been upward movement for more than one year. Transactional activity remained subdued over the last quarter as investors continued to take a cautious approach to the market. The Reserve Bank of New Zealand has maintained a steady Official Cash Rate in its last three monetary policy meetings, indicating that rates are at or near their peak in the current cycle. With interest rates stabilising it is anticipated that greater clarity over asset pricing will emerge. This, in combination with the election having been completed, is likely to result in an uplift in sales activity during the final quarter of 2023 ad into 2024.
  • As market sentiment wanes, we witness a discernible decline in the overall optimism that prevailed at the start of the year in Beijing and Shanghai. This shift in sentiment is particularly evident when analysing the escalating cap rate.
  • In Bengaluru, transaction volume remained similar to the previous quarter. There were a few transactions driven by individual investors as institutional players were less active. Deal sizes were smaller but more resilient, resulting in a marginal downward change in the cap rate in the office segment.
  • Seoul office assets remain in high demand, with rental level holding firm for landlord. However, there is increasing downward pressure on values due to a lack of liquidity in the market.
  • Some investors may consider Japan a risk-averse market for real estate investment since the start of the interest rate hike. This is mainly driven by its relatively accommodative monetary policy. The sales volume of foreign investments in real estate has yet to witness a significant increase, although sentiment and interest remain strong. The Tokyo office sector performed well in Q3, with occupancy rates remaining at a healthy level, especially when considering the challenges faced by some other cities in terms of take-up. This is driven by the return to office culture. Government statistics indicate that the hybrid working ratio in Tokyo was 44% in mid-2023, down from a peak of over 64% in 2021.
Retail Sector
  • The Mumbai retail sector is anticipated to gain traction in the near future, driven by demand from the luxury segment and the release of additional supplies of quality organized retail assets.
  • Shanghai retail has demonstrated relative stability in the last quarter. Landlords offered competitive terms to maintain and attract tenants led to an overall improvement in the uptake. The consecutive mid-Autumn and National holidays bolstered domestic consumption sentiment.
Industrial Sector
  • Assets in Australia with long lease expirations and low fixed-term rent experienced downward pressure on the values during the last quarter.
  • In Bangkok, rental and sales were stable in a low-activity market with lack of sufficient transaction evidence. Owners were maintaining their rents and prices, and expected to continue doing so into next quarter. The market needs to undergo pricing adjustments in order for transactions to materialize.
  • In Beijing and Shanghai, the industrial sector experienced a wave of new supply as the take-up of existing stock slowed down. The government’s release of more industrial and logistics land resulted in an augmented supply in the market.
  • Mumbai industrial demand remained strong in Q3, and the compression in the cap rate was attributed to lower availability of Grade A stock, coupled with a positive outlook from large institutional investors towards the sector. The investors were willing to trade off lower current yields for anticipated future growth in the sector.

Download the latest APAC Cap Rates Report | Q3 2023 below. For more real estate advisory insights across Asia Pacific, reach out to our experts CK Lau & Dorothy Chow – Asia, Dwight Hillier – Australia, Flora He & James Woo – China, Hannah Jeong – Hong Kong, Ajay Sharma – India, Monica Koesnovagril – Indonesia, Noriko Hattori – Japan, Sungwook Cho – Korea, Kane Sweetman – New Zealand, Paul Ramirez – Philippines, KengChiam Tan – Singapore, Joey Yuan – Taiwan, Karlo Pobre - Thailand.


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Asia Pacific Cap Rates Report | Q3 2023

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Dwight Hillier

Managing Director | Valuation & Advisory Services, Strategic Advisory & Healthcare & Retirement Living


I am responsible for the oversight and management of Valuation & Advisory Services; Strategic Advisory & Healthcare & Retirement Living  businesses in Australia.  Ensuring Colliers remains best in class providers in their respective markets. 

Managing Director, Valuation & Advisory Services 2013 - Present
National Director, CBD Commercial Valuation, Sydney CBD Office 2006 - 2013
State Director, Consultancy and Valuation, Sydney CBD Office 2003 - 2006
Associate Director, Sydney CBD Office 2002 - 2003
Senior Valuer, Sydney CBD Office 1998 - 1999
Valuer, Sydney West Office 1995 – 1998


Some of the more prominent clients that I regularly undertake national valuation appointments from include The GPT Group, AMP Capital Investors, DEXUS, Brookfield, and Lendlease.

Some of my more recent valuation instructions of Premium and A grade commercial office assets undertaken are as follows:-

‘Governor Phillip’ & ‘Governor Macquarie Towers’, 1 Farrer Place, Sydney
‘RBS Tower @ Aurora Place’, 88 Phillip Street, Sydney
‘Darling Park’, 201 Sussex Street, Sydney
‘Grosvenor Place’, 225 George Street, Sydney
1 Bligh Street, Sydney
120 Collins Street, Melbourne
530 Collins Street, Melbourne
8 Exhibition Street, Melbourne
‘Bourke Place’, 600 Bourke Street, Melbourne
One One One Eagle Street, Brisbane
1 William Street, Brisbane
Central Plaza I, II & III, Brisbane
‘Bankwest Tower’, 108 St Georges Terrace, Perth
‘Brookfield Place', 125 St Georges Terrace, Perth
‘Ernst & Young Centre’, 12 Mounts Bay Road, Perth


Prior to joining Colliers, I worked within the Research Department of the Property Council of Australia (PCA), then with a boutique firm of Valuers & Land Economists, where I was involved in the valuation of residential property predominantly for first mortgage security purposes, as well as commercial and retail rental advice.

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