The 2026 Emerging Trends in Real Estate® Asia Pacific report, published jointly by ULI and PwC found a mood of cautious optimism among real estate professionals; however, they report considerable disparities in markets and sectors across the region.
Tokyo was ranked as the top city for investment in the Emerging Trends survey, top of the table for the third consecutive year, followed by Singapore, Sydney, Osaka, and Seoul. Investors and managers interviewed for the report expressed a strong preference for cities with stable economies, low vacancy in key sectors, and market liquidity.
However, global and regional investors remain reluctant to invest in China, not least because many have underperforming legacy assets there. Mainland China and Hong Kong remain the only markets with substantial distress. However, there were signs of optimism regarding Shanghai and Hong Kong, which are expected to see more activity in 2026, if not a dramatic turnaround.
The data center sector is expected to outperform in 2026, while survey respondents also expressed confidence in logistics, self-storage, and living sectors, such as multifamily housing and student accommodation. Expectations for the office and retail sectors remain subdued, although there are some segments, such as Tokyo and Singapore offices, where low vacancy is expected to drive strong performance. The trend towards sectors with a greater operational element and towards strategies driven by rental growth, rather than capital gains, continues.
Concerns over geopolitics remain elevated for survey respondents, but the single most significant challenge cited is construction costs, particularly evident in developed markets. High construction costs are expected to constrain new development in a number of markets. Sustainability measures, meanwhile, are increasingly expected to show a return on investment.
Alan Beebe, Chief Executive, ULI Asia Pacific, says: “The survey and interviews show an uptick in optimism overall, but with wide variances across the region. Sentiment is improving, but is somewhat fragile. Developed markets are very much in favor; however, there is a strong cohort of investors who believe in the Indian market, due to its size and scale.”
Stuart Porter, Asia Pacific real estate leader, PwC Global Real Estate leadership team, says: “Within a disparate Asia market, what you can discern is that rising rents have cushioned the prospects of rate pressures, global capital pivots further towards the robust markets of Japan and Australia, and construction costs have somewhat redirected focus from new development to disciplined asset management.
“Data centers remain the darlings of the investment world, though assumptions are subject to challenge by the bargaining power of tenants, power capacity constraints, and technological advances. AI [artificial intelligence] is in the early stages of transforming middle and back-office roles and operations while elevating the value of operational expertise. Use of AI might temper the office recovery, even as ‘work from home’ largely dissipates.”
Mark Cooper, senior director, Thought Leadership, ULI Asia Pacific, adds: “Real estate investors expect a more amenable interest rate environment in 2026, with falling rates in markets such as Australia and South Korea and only minor rises from a very low base in Japan. While Asia Pacific faces many challenges, it is still home to the bulk of the world’s growth, and this supports real estate investment in the long term.”
The full 2026 report can be accessed via the ULI Knowledge Finder.
