Where are the most compelling growth and value plays, and are they consistent across markets?
This next cycle calls for a recalibration of strategy, one that goes beyond traditional sector or geography-based approaches.
A Renewed Focus on People
Understanding where populations are moving and how their needs and preferences are changing is critical to anticipating future demand.
Asia Pacific’s Silver Wave
As populations age, the built environment must evolve to support new lifestyle, care, and infrastructure requirements.
Beyond the Obvious in Tech and AI
While technological advancements and the AI boom continue to reshape demand, some interesting opportunities lie in less obvious, underexplored segments.
Tactical Responses and Attractive Entry
Demand-supply mismatches are creating pockets of mispriced risk and attractive buying opportunities in this cycle that can be tactically captured.
A Renewed Focus on People
Demographics & Mobility are Rewriting Real Estate Needs
Asia Pacific’s strength lies in its large, diverse, and growing population. By 2035, an estimated 65% of the world’s most populous cities will be in this region, underscoring the scale of urban concentration and demographic weight. Most of this growth will be concentrated in emerging markets, but its ripple effects extend within the region through rising migration, talent mobility, and rising consumer flows.
POPULATION INDEX
DEC 2015 = 100
Source: Oxford Economics, as of Q2 2025
Mobility & Porous Borders
Perhaps underappreciated today is the increased intra-regional migrant flow within Asia Pacific. According to the World Bank, skilled migrants from East Asia and the Pacific are increasingly heading to the major cities of high-income countries within the region—such as Singapore, South Korea, Japan, and Australia. Many Asia Pacific economies have also adopted more liberal immigration policies, setting them apart from more restrictive trends in parts of the Western world. International students now account for a rising share of mobility flows, drawn not only by favorable visa regimes but also by the region’s relative affordability.
FOREIGN POPULATION GROWTH INDEX - DEC 2018 = 100
Source: Korea Immigration Service, Australia Government – DOHA, Statistics of Tokyo, Department of Statistics Singapore. Hong Kong Census and Statistics Department, as of end 2024
Shifting Demographics, Affordability & Preferences
At the same time, developed markets face both enduring and emerging demographic shifts in its local population. Urban migration has had long-standing influence on real estate planning. However, newer well-documented dynamics, such as delayed marriages, shrinking household sizes, worsening affordability and changing preferences are introducing more transformations on the rental housing market, forcing changes in housing formats, tenure models, amenity expectations and locational preferences.
APAC HOUSING BURDEN, HH SIZE, BUY VS RENT
Source: Oxford Economics, Demographia International Housing Affordability, Singstat,South Korea Ministry of Land Housing Survey, ULI Home Attainability Index, as of end 2024
What does it mean for Real Estate?
It is the composition and mobility of people that are transforming real estate strategies. We believe the opportunity lies in understanding these market-specific dynamics and matching capital to need, segment, and timing.
The table below outlines our preferences for living strategies in the region.
MAJOR FOREIGN POPULATION GROWTH SOURCES
Source: AEW Research
Asia Pacific’s Silver Wave
Ageing is Presenting Investors With Long-term Opportunities for Housing, Healthcare and the Rising Influence of the Older Consumer
Among the few certainties in today’s world is that societies are ageing. While this is a global trend, it is especially pronounced in parts of Asia Pacific, in particular North Asia. Japan led the region’s aging curve in the early 2000s, but today it is South Korea’s “silver tsunami” making headlines, with its 65+ population projected to grow by 3.0% annually over the next decade.
POPULATION SIZE OF 65+ ACROSS ASIA PACIFIC
Source: Oxford Economics, as of June 2025
Ageing Intersects with Evolving Lifestyles and Shifting Traditions
Societies today are ageing differently than in the past—shaped by better healthcare access, life expectancy, quality of life, and accumulated wealth. Unlike previous cohorts, today’s seniors are living longer, staying active, and often wield significant financial influence.
However, it is not just demographics driving demand, cultural norms that once constrained the aged housing sector from taking off are turning, though unevenly, across markets. At the same time, with a rapidly expanding base of seniors today, there are fewer family members able to provide care. These collectively underpin a compelling real estate thesis around evolving housing needs for aging populations. Japan and Australia already have established seniors housing models that will continue to play a role, but we believe the strongest growth potential lies in South Korea. In contrast, market scale and investable opportunities may be more limited in Hong Kong and Singapore.
Housing Options: Different Markets, Different Models
The investment opportunity is not uniform across markets – the product spectrum ranges from lifestyle-led communities with optional care services to institutional-grade, long-term care facilities tied closely to public insurance systems.
Japan stands out for its focus on nursing care and long-term care facilities, underpinned by its public Long-Term Care Insurance (LTCI) system. Australia, by comparison, emphasizes retirement villages and land lease communities designed around lifestyle, with care services layered on top as needs evolve. As South Korea’s seniors housing market starts to take off, both lifestyle and care products will be available.
Capturing the Edges of Ageing Demand
Besides the obvious seniors housing opportunities, there are other parts of the real estate market that will start to evolve to cater to the ageing population. Medical facilities / out-patient clinics could end up being more dispersed across the city, and the retail sector could also see tenants pivoting to cater to the needs of seniors. Strategies like this could end up being more interesting in locations which are less dense like Australia – where suburbs could be more defined by demographic traits. For instance, in Greater Sydney alone, we expect there will be close to 10 local government areas (administrative districts) where seniors (aged 65+) make up over 25% of the population by 2035—creating distinct local needs and opportunities across housing, retail, healthcare, and community infrastructure.
Beyond the Obvious in Tech and AI
Data Centers Take the Limelight, but Other Sub-sectors Can Benefit Too
Few sectors today offer the structural growth tailwinds of data centers. In the early 2020s, the data center story gained new momentum with AI—driving unprecedented demand and expanding the geographic scope of development. DC Byte’s report shares that Asia’s operational data center IT power capacity will more than double (between 2.2x to 2.5x), from 2024 to 2029. The bulk of this expansion will be in developed Asia Pacific markets, which account for 92% of the new capacity under construction.
However strong the fundamentals, data centers remain among the most complex real estate assets to develop—characterized by high barriers to entry due to power and land constraints, regulatory hurdles, technical requirements, and the need for long-term tenant relationships. The additional but critical element of assessing an asset’s “future-proofness” is extremely important where factors such as upgradeable power density, access to renewable or backup power, flexible cooling systems, and robust physical & network security play a role in long-term viability.
That said, investors can still gain exposure to the data center growth theme without taking on the full spectrum of development risk. Alternative angles include:
- Power-secured land: Sites with existing power approvals or grid access.
- Battery storage facilities: Important for reducing latency and supporting energy resilience.
- Proximity to top engineering universities: Access to talent and potential innovation clusters.
- Industrial assets near ports: Critical for importing and staging specialized data center equipment.
Demand-Supply Mismatches & Tactical Entry
Mispriced Risk and Good Buying Opportunity Available
Each downturn leaves investors more risk-aware, often leading to overly cautious positioning as markets start to recover. In our opinion, that creates openings in markets where sentiment could be misaligned with fundamentals. Separately, select markets offer tactical entry points that can reveal interesting sector-agnostic opportunities.
Long WALE Logistics in Australia
In Australia, long WALE logistics assets were largely avoided over the past four years as investors focused on short WALE opportunities to capture strong market rent growth. But with rental growth now slowing and vacancies rising in some submarkets, the income stability of long WALE assets is regaining appeal. Over time, lease reversion offers potential for further income uplift.
SELECTION OF LOGISTICS TRANSACTIONS IN SYDNEY & MELBOURNE (YIELD VS WALE)
Source: MSCI & AEW Research
Active Sellers in Japan
We believe Japan presents a compelling opportunity to invest, particularly as interest rates begin to rise. The market remains highly fragmented, and the real advantage lies with investors who have local teams and partners capable of sourcing off-market deals. Much of the opportunity stems from corporate divestitures driven by governance reforms and a focus on shareholder returns. But equally important are more idiosyncratic situations—such as families selling legacy positions in underperforming companies or disposing of assets to manage inheritance tax liabilities.
BUYING OPPORTUNITIES IN JAPAN
- CORPORATE ASSET SALES
Activist funds and PE managers entering the market, driving balance sheet optimization + regulatory & corporate reforms. - FAMILY SALES
Families sell assets and gift proceeds to reduce inheritance tax - DISTRESS ON CONSTRUCTION PROJECTS
Construction bankruptcies to a 10-year high post rises in input costs
Source: AEW Research
Hong Kong - Plug the Debt Funding Gap
We estimate a debt funding gap of approximately 700 million in Hong Kong across all real estate sectors. This can create an opportunity for investors to step in as rescue capital—taking positions with debt-like risk but equity-style control, to reposition assets toward sectors with stronger fundamentals.
HK DEBT FUNDING GAP BY SECTOR
Source: AEW Research, MSCI, JLL, CBRE
Outlook Sensitivities
What risks or shifts could alter the outlook—and how should investors prepare?
The investment strategies identified are mostly underpinned by structural drivers, but no strategy is without its vulnerabilities. We consider some of the more specific risks, outside of the typical macro-economic trends that could influence outcomes and what investors can do to mitigate them.
| RISK / SHIFT | POTENTIAL IMPACT | INVESTOR PREPARATION & MITIGATION |
|---|---|---|
| Housing Affordability & Policy Intervention | Rising prices/rents may trigger rent controls, cooling measures, higher foreign-buyer taxes. | Underwrite rental growth conservatively; focus on mid-market/affordable offerings aligned with local incomes to reduce perceived exploitation. |
| Anti-Foreigner Sentiment | Could reverse liberalized immigration policies, dampening foreign population growth which is a key demand driver for some niche residential segments | Adopt a “barbell” portfolio approach with some assets targeting foreign demand, others serving locals; prioritize markets with structural labor shortages (e.g., Japan, South Korea) where it would be difficult to reverse these policies. |
| Reputational Risk in Seniors Housing | Public perception of profit over care can erode trust, prompt political or regulatory action like rent caps or restrictions on operating models | Partner with reputable local operators and insurance providers to reinforce perception of safety, stability, and long-term commitment. Offer needs-based products and maintain transparent pricing. |
| Infrastructure Bottlenecks | Energy grid limits, inadequate transport, permitting delays can reduce asset viability—especially in power- or connectivity-intensive sectors like data centers and logistics. | Target submarkets with planned infrastructure upgrades; stress-test for development delays; ensure redundancy in critical utilities. |
| Tech Disruption & Obsolescence | In tech-linked assets, rapid shifts in technology or user needs could shorten asset relevance. | Prioritize future-proofing—upgradeable infrastructure, adaptable design, strong operator partnerships. |
| Private Credit Exposure in Funding Gap Markets | Macro volatility or liquidity shifts could impair borrower health and collateral values. | Tighten underwriting standards; focus on resilient borrowers and collateral with multi-use potential. |
Source: AEW Research
In Conclusion
Looking Back, Moving Forward: The Next Chapter in Asia Pacific Real Estate
Over the long-term, Asia Pacific real estate has performed well relative to other regions and asset classes. It has demonstrated stability and resilience through multiple performance cycles, supported by the region’s unsynchronized economic, monetary, and property cycles.
While the market remains smaller and less institutional than its Western counterparts, this can work to its advantage, as inefficiencies create space for idiosyncratic opportunities. Beyond the obvious diversification benefits, we believe Asia Pacific’s structural appeal lies in the fact that it is still maturing, offering investors entry into sectors with significant growth potential as the market institutionalizes. The region is also setting itself apart through collective and cooperative efforts on trade and business, further enhancing its long-term outlook.
Taken together, these factors can position investors well for the future of investing in Asia Pacific.
However, in the next cycle, with limited scope for further cap rate compression and greater instability in demand from traditional real estate segments, a more targeted approach will be required. We see compelling opportunities in structural thematics linked to demographics, mobility, and ageing. We also believe strongly in the AI growth story, with potential “easy wins” in the adjacent sectors that benefit from its expansion. Finally, as in past cycles, certain market conditions may create selective opportunities that appear favorably priced relative to perceived risk, potentially offering higher-than-average returns for well-prepared investors.
In a market defined by change, positioning ahead of evolving market dynamics will be key to sustaining performance.
For more information, please contact:
HANNA SAFDAR
Head of Research and Strategy, Asia Pacific
hanna.safdar@aew.com
+65.6303.9014
JAY STRUZZIERY, CFA®
Head of Investor Relations
jay.struzziery@aew.com
+1.617.261.9326
This material is intended for information purposes only and does not constitute investment advice or a recommendation. The information and opinions contained in the material have been compiled or arrived at based upon information obtained from sources believed to be reliable, but we do not guarantee its accuracy, completeness or fairness. Opinions expressed reflect prevailing market conditions and are subject to change. Neither this material, nor any of its contents, may be used for any purpose without the consent and knowledge of AEW. There is no assurance that any prediction, projection or forecast will be realized.
