• Occupier demand saw an increase towards the year-end, attributed mainly to an increase in take-up in China, Southeast Asia, and Seoul. However, the opposite trend was noted in Tier-1 markets

• Vacancy saw a slight fall this quarter. Moving ahead, completions are slated to go down to more reasonable levels, which could lend support to vacancy levels across the region

• Transaction volumes for the whole of 2025 went down by 18% as compared to the previous year, but trended upwards through the year. As yields compress in major markets, investor activity is poised to increase

Net absorption recorded 1.5 million sqm in Q1 2026, falling by 1.3 million sqm q-o-q. Notably, 1.2 million sqm of this take-up was in Tier-1 cities, with improvements noted in Beijing, Shanghai, Tokyo, and Sydney. In particular, following a prolonged period of weak demand, Shanghai recorded an improvement in quarterly net absorption, driven by local 3PLs capitalising on low rents for higher quality space. Meanwhile, quarterly net absorption fell in Seoul, but this was alongside a decrease in completions.

Total completions continued their downward trend this quarter, falling by 1.2 million sqm q-o-q to 3.6 million sqm, mainly contributed by decreases in Shanghai, Singapore, Seoul, Melbourne, China Tier-2 cities, and India. Vacancy fell by 0.2 percentage points q-o-q to 11.6%. While the region remains in a high vacancy environment, this is poised for improvement as the market rebalances.

Rents increased marginally in Seoul and Singapore. Both Sydney and Melbourne recorded rental growth this quarter, although Melbourne’s effective rental growth continued to be limited by incentives. In Tokyo, rents in prime areas continued to be driven up by high demand and construction costs. Across Greater China, rents continued to decline amid a high-vacancy environment.

Investment activity remained resilient in select markets this quarter. Sustained strong demand from both domestic and overseas investors was noted in Tokyo, while a large transaction occurred in Seoul this quarter. Singapore also recorded some high-profile transactions.

Outlook
Rents will likely remain under pressure before stabilising in the medium term as the market rebalances. Outside of Greater China, leasing momentum should remain resilient, driven by expansions and upgrades by 3PL and e-commerce firms. Investor interest is expected to remain strong, especially for core opportunities in markets like Seoul, Tokyo, and Singapore; but investors are likely to exercise heightened caution and selectivity as they navigate the current macroeconomic climate.