As the Asia-Pacific region embarks on 2025, it carries forward an encouraging economic momentum, with Q1 GDP growth reaching 3.9%, reminiscent of pre-Trump era figures. The reactivation of aggressive U.S. trade policies under President Donald Trump's second term has introduced significant uncertainty across global markets, particularly affecting the Asia-Pacific economies. However, amidst these challenges, Singapore and Hong Kong have emerged as resilient hubs, especially within the commercial real estate sector. A report by Cushman & Wakefield highlights a dramatic shift in U.S. economic policy during Trump's first 100 days in office, causing ripple effects worldwide. Despite increasing obstacles, the real estate market in the APAC region remains robust, supported by strong occupier demand and rising investment volumes.
The Asia-Pacific region entered 2025 with a solid economic foundation, characterized by substantial GDP growth. Notably, Singapore and Hong Kong continue to attract significant investment interest even as regional players prepare for potential volatility. According to the report, the real estate market in this region began the year with notable momentum, marked by heightened demand for space and increased investment activity throughout 2024. Singapore's industrial market stability is highlighted as a standout feature, described as part of a group of "landlord-friendly" markets due to its tight vacancy rates and robust rental growth. Although decision-making may slow due to policy ambiguity, Singapore's economic diversity provides a buffer against potential disruptions.
Hong Kong, however, faces more pronounced tensions due to its exposure in financial markets. The Hang Seng index is flagged for potential volatility, which could impact consumer spending, business profitability, employment, and eventually the commercial real estate (CRE) sector. Nevertheless, Hong Kong maintains a significant trade surplus with the U.S., possibly drawing attention from the Trump administration in the future. Despite the prevailing uncertainty, the CRE fundamentals in Hong Kong remain resilient so far.
The economic forecast for the region largely depends on developments in the U.S. Stagflation, indicating sluggish economic growth alongside persistent inflation, is becoming the consensus prediction for 2025. Yet, there is optimism regarding a potential U.S. recovery in 2026, which could provide positive momentum for the Asia-Pacific region. Cushman & Wakefield advises a cautious yet proactive strategy, urging organizations to reassess their real estate strategies and adapt according to their risk profiles. With over 230 million square feet of new office space expected to be completed by 2026 in APAC, the stakes are high. Nonetheless, cities like Singapore and Hong Kong demonstrate that current turbulence does not warrant immediate concern.
Past experiences indicate that the region can swiftly recover when conditions improve and confidence returns. As such, while uncertainties persist, the resilience displayed by key markets in the Asia-Pacific region suggests a promising outlook for the future of commercial real estate despite the challenging backdrop.