APAC Capital Flows Accelerate as Investors Seek Growth

The report highlights a decisive shift in global capital allocation towards the APAC region. APAC-focused capital raising has jumped over 130% since 2024, now accounting for 11% of global real estate fundraising in the first three quarters of 2025. Investors are increasingly targeting markets with strong economic growth and diversification opportunities.

While established destinations like Japan, Australia, and Singapore remain highly preferred, India has emerged as a key growth market for real estate investment within APAC. Expanding middle-class consumption, digital infrastructure development, and a transparent regulatory framework are positioning the region as an attractive long-term investment hub.

India at the Centre of APAC Investment Strategy

The report underscores India’s rising appeal for large-scale capital deployment across core and alternative real estate assets. Investors are particularly interested in land and development-led opportunities, alongside institutional-quality stock in office, residential, industrial and logistics, and data centre segments.

Institutional investments in India totalled USD 4.3 billion during the first nine months of 2025, driven by steady quarterly momentum. With expectations of strong closures in Q4, annual investment volumes for 2025 are projected at USD 5–7 billion, supported by balanced participation from domestic and foreign investors.

Leadership Commentary

Badal Yagnik, CEO & MD, Colliers India, said:
“Investments in India’s real estate sector have demonstrated remarkable resilience. We foresee annual investments of USD 5-7 billion in 2025 and 2026, driven by robust domestic growth, rising urbanization and expanding infrastructure. Both domestic and offshore capital are expected to accelerate, reinforcing India’s position as a resilient, high-potential market.”

Vimal Nadar, National Director & Head of Research, Colliers India, added:
“Office and residential will continue to dominate investments, while industrial & logistics and alternative assets such as data centres will gain traction. Cross-border capital will remain essential as India strengthens its presence among APAC’s preferred destinations.”

Key Sectors to Drive Investments in 2026

Office & Residential

These segments are projected to contribute nearly 60% of India’s investment activity in 2026, supported by sustained occupier demand and a strong development pipeline.

Industrial & Logistics

Investor focus in APAC is led by the I&L sector, driven by e-commerce expansion. Demand for big-box warehousing, last-mile logistics, and cold-storage facilities continues to rise, particularly in India, Japan, and Australia.

Data Centres

Data centre assets are emerging as a high-growth opportunity in Singapore, Australia, and India, supported by hyperscale demand and digital infrastructure expansion.

Retail & Hospitality

Retail assets are regaining investor confidence as supply stabilizes. Hospitality and student housing are expected to attract capital as tourism rebounds and educational migration rises.

India Strengthens Position as Cross-Border Capital Magnet

The survey finds that 64% of APAC investors expect economic improvement in 2026, and nearly 60% are optimistic about liquidity and rental growth. The growing participation of family offices and high-net-worth investors is expected to intensify competition for high-performing assets.

Summarizing market sentiment, Sam Harvey-Jones, COO, Asia Pacific, Colliers, said:
“Investors are shifting decisively toward stability and opportunity as markets regain footing. Improving fundamentals and normalizing pricing expectations are fuelling optimism for 2026.”

Conclusion

With strong economic fundamentals, deepening institutional-grade supply, and expanding participation from foreign and domestic investors, India is positioned to play a central role in driving APAC real estate capital flows through 2026. A steady rise in demand across office, residential, I&L, and data centre assets is expected to keep momentum firm in the coming year.

Also Read: India Leads APAC Real Estate Investments with 88% Growth in H2 2024

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This leap from 36% in 2015 to 47% in 2024 underlines India’s growing influence in the global corporate real estate landscape, positioning it as a strategic anchor amid shifting trade patterns, supply chain diversification, and macroeconomic disruptions.

India’s Office Market in Numbers

India’s leasing boom is powered by Global Capability Centres (GCCs), multinational firms, and third-party IT service providers, with the demand concentrated in key cities known for talent and infrastructure readiness.

What’s Fueling India’s Growth?

• Cost efficiency and deep talent pools
• Resilient infrastructure and flexible leasing formats
• Strategic realignment of global portfolios (China+N approach)
• Strong domestic consumption base and fiscal prudence

Knight Frank places India in the ‘low exposure, moderate resilience’ category of its Vulnerability Matrix, meaning the country has low dependence on external trade and high capacity to withstand global economic shocks—unlike more export-dependent economies such as South Korea and Singapore.

Industrial Sector Holding Steady

While cities like Shanghai and Beijing struggle with oversupply, Indian industrial hubs in Mumbai, NCR, and Bengaluru have maintained balanced vacancy levels thanks to consistent demand.

New formats such as build-to-suit and flexible leases are gaining popularity, reflecting a shift toward customisation and operational agility.

Shifting Trade Lanes and New Hotspots

Knight Frank’s report also notes that geopolitical factors, including a potential second Trump administration and changes in global tariff regimes, are redefining supply chains and real estate strategies across Asia.

• Southeast Asia (Vietnam, Indonesia) expected to see 15–20% rise in industrial demand
• India remains dominant in office leasing among services-driven economies

Expert View

“India’s rise to a 47% share of APAC leasing volumes is a testament to its robust fundamentals and strategic importance,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

“Corporate real estate strategy must now go beyond expansion—it must be about operational durability and cost performance,” added Tim Armstrong, Global Head, Occupier Strategy and Solutions.

Conclusion

India’s real estate sector is no longer just a cost-saving alternative—it is a cornerstone of global CRE strategy. With rising domestic demand, digital transformation, and supply-side maturity, India is now at the heart of APAC’s corporate property evolution.

Also Read: BFSI and Flex Spaces Drive Office Space Demand in Q3 2024

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Bengaluru’s Commercial Market Sees Strong Growth

Bengaluru’s commercial real estate sector experienced strong demand, leading to lower vacancy rates due to a supply shortfall. Along key business corridors, rental and capital rates for Grade A office spaces saw a significant increase. The Outer Ring Road (ORR), North Bengaluru, and Whitefield emerged as key locations for high-value transactions, driven by the availability of well-specified floorplates. Capitalization rates for these areas remained stable in the range of 8.0% to 8.5%.

Additionally, Bengaluru’s organized retail sector witnessed an uptick in transaction volumes, with capital values rising in high street areas. This increase is attributed to heightened consumer spending during the festival season, leading to stronger revenue shares for retailers.

Mumbai’s Commercial Real Estate Market Expands

Mumbai’s office market recorded a sixfold increase in supply year-on-year, yet the overall demand outpaced new inventory, resulting in a robust market. The demand for office space saw the highest quarterly growth in 2024, though rising supply prevented significant rental hikes except in select micro-markets where availability remained limited.

While the industrial real estate segment in Mumbai recorded a 15% supply increase, transaction volumes were slightly lower compared to the previous year. This led to stable cap rates in Q4 2024.

Macroeconomic Trends and Inflation Impact

Inflationary pressures were evident, with Consumer Price Index (CPI) inflation rising to 5.22% in December 2024, compared to a three-month average of 5.63%. This was largely attributed to rising urban inflation in Q3 2024, impacting economic dynamics across the region.

Ajay Sharma, Managing Director, Valuation Services, Colliers India, commented on the findings: “The rising transaction volumes in Bengaluru’s organized retail sector and strong demand for commercial space across key markets indicate sustained business confidence. Mumbai’s industrial segment saw increased supply, which helped keep cap rates stable, while Bengaluru’s Grade A office market saw strong demand pushing capital values upward.”

Outlook for 2025

As interest rates continue to decline and economic activity remains strong, the commercial real estate markets in Mumbai and Bengaluru are expected to maintain their growth trajectory. With consumer spending rebounding, particularly in retail and office sectors, investors and developers are likely to see continued demand for prime assets across key business hubs.

Also Read: Colliers assists Pinnacle, in setting up first office in Hyderabad

The post Business Confidence Rises as Demand Grows and Interest Rates Decline: Colliers APAC Cap Rate Report Q4 2024 appeared first on Square Feat India.

Flex Spaces Surge in India

In India, flex spaces have become a significant component of the commercial real estate market. Since 2019, the stock of flex spaces has doubled, surpassing 50 million square feet (msf) by the second quarter of 2024. The share of flex spaces in occupiers’ portfolios has grown from 5-8% in 2019 to approximately 10-15% in 2024. This surge is driven by the increasing demand for adaptable work environments that cater to dynamic business needs.

“India is a leading player in the APAC flex market, with a penetration rate of 7% compared to 3-4% in other regional markets. The robust growth is evidenced by significant expansions from leading flex operators across major cities. In the first half of 2024 alone, there was 4.4 million square feet of flex leasing. We expect demand to potentially surpass the 2023 high of 8.7 million square feet by year-end,” said Arpit Mehrotra, Managing Director of Office Services at Colliers India.

Key Trends Shaping Corporate Real Estate

Colliers’ report identifies five crucial trends transforming corporate real estate strategies:

1. Enhanced Enterprise Resilience: Companies are focusing on flexibility within their real estate portfolios to withstand market fluctuations and adapt to changing needs. Globally, 80% of CRE leaders plan to reduce or maintain their office space by 2026, highlighting a shift towards more flexible and optimized real estate assets.
2. Workplace Transformation for Talent Management: The rise of hybrid working models is driving changes in workforce management. 59% of CRE leaders globally are expected to use labor market analytics more proactively, underscoring the importance of data-driven decision-making.
3. Artificial Intelligence and Data Integration: AI and data analytics are revolutionizing real estate strategies, enhancing efficiency, and optimizing resource allocation. 31% of CRE leaders see AI as a key area for organizational transformation in the next five years.
4. Diversification in CRE Partnerships: There is a growing trend towards adopting multiple CRE partner models to improve service delivery and operational flexibility. 98% of CRE leaders plan to either maintain or increase their outsourcing strategies in the coming years.
5. Sustainability-Focused Real Estate Upgrades: With increasing regulatory pressures and environmental concerns, there is a strong push towards upgrading legacy real estate assets. 57% of CRE leaders are prioritizing sustainability practices in their real estate decisions.

India’s Green Certification Growth

India has seen a significant rise in green-certified office space. As of Q2 2024, approximately 490 million square feet of India’s Grade A office stock is green-certified, marking a 68% increase since 2019. This growth reflects the heightened demand for sustainable workspaces. Vimal Nadar, Senior Director and Head of Research at Colliers India, noted, “High-performing green assets have gained considerable importance among stakeholders. Sustainable practices, including green building certifications and environmental assessments, will remain critical for developers and investors.”

The report indicates that as the market continues to evolve, innovation, flexibility, and sustainability will be key drivers in shaping the future of commercial real estate in Asia Pacific and India.

Also Read: 58% of companies to expand flexible office space portfolio by 2026

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