Asia Pacific Data Centre Trends & Opportunities (CBRE)
The Asia Pacific data centre sector has undergone a significant transformation in recent years, evolving from what was formerly regarded as a mere piece of infrastructure to a highly sought-after real estate asset at the cutting edge of technology.
The Artificial Intelligence (AI) and cloud services boom is driving robust demand for both colocation and hyperscale data centres across Asia Pacific, stirring interest from real estate investors keen to capitalise on this rapid expansion.
This report explores the key data centre investment trends, opportunities and outlook for the sector in Asia Pacific, and offers insights into the data centre occupier and investment markets in Australia, Hong Kong SAR, India, Japan, Korea, Mainland China, Singapore and Southeast Asia.
AI Boom Drives Data Centre Demand Amid Supply and Power Challenges (CBRE)
The rapid growth of artificial intelligence (AI) and cloud computing is driving unprecedented demand for data centres across Asia Pacific. Despite expectations that data centre supply will double by 2028, the region still faces a shortfall of 15–25 gigawatts, primarily due to limited power availability and a shortage of AI-ready infrastructure.
AI workloads require over twice the power density of traditional setups, necessitating upgrades in cooling, floor load, latency, and bandwidth. Many current and planned facilities are not equipped to meet these new technical standards.
Growing Importance of Scope 3 Emissions in Real Estate
Addressing Scope 3 emissions has become increasingly vital in real estate, driven by rising expectations from investors, regulators, and stakeholders for meaningful climate action. According to the World Green Building Council, buildings account for around 39% of global energy-related carbon emissions. Of this total, around 11% is attributed specifically to embodied carbon emissions, which arise from materials and construction. With the building operational efficiencies continuously to be improved and electricity grids to be decarbonised, embodied carbon emissions represent a progressively larger proportion of total emissions. Hongkong Land has a long history of enhancing energy efficiency and reinvesting in existing assets, Scope 3 emissions represent nearly 90% of our total emissions. As a developer and owner of buildings, prioritise initiatives to address embodied carbon measurement, monitoring and reduction along the supply chains is crucial.
Hongkong Land’s Commitment to Scope 3 Emissions Reduction
Our 1.5°C aligned near-term science-based targets is to reduce 22% carbon intensity for Scope 3 greenhouse gas emissions by 2030. As the first Hong Kong-based developer to create bespoke embodied carbon assessment tools. These tools adopt a supplier-based approach to estimating emissions and provide a level of granularity. Hongkong Land integrates these across project design, tendering, and construction. The company actively collaborates with industry partners to standardise procurement guidelines, focusing specifically on five key construction materials: cement, concrete, façade, rebar, and structural steel.
Case Sharing on New Development in Shanghai
Hongkong Land’s Westbund Central is the Group’s largest-ever single investment, it is an US$8 billion development encompassing approximately 1.1 million sq. m. of prime mixed-use property strategically located at Shanghai’s Xuhui Waterfront. Westbund Central demonstrates Hongkong Land’s proactive and strategic approach to embodied carbon management. Utilising our bespoke embodied carbon assessment tools, the project team systematically measures the embodied carbon intensity associated with the development. The team closely reviews construction materials and actively pursues opportunities to minimise embodied carbon through targeted optimisation efforts. By applying detailed schematic design analyses and structural material optimization techniques, the project has already achieved significant reductions. Specifically, these optimisation strategies have resulted in a achieving a 16% overall carbon reduction in structural steel and a 7% in concrete.
Westbund Central, China
Case Sharing on Transformation of LANDMARK in Hong Kong
Hongkong Land’s Tomorrow’s CENTRAL project, a plan to invest over US$400 million by expanding and upgrading its LANDMARK retail portfolio over a three-year period, has established an ambitious target to divert at least 75% of total construction waste by weight from landfills. Before commencing refurbishment works, we conducted a comprehensive pre-refurbishment audit, systematically assessing and analysing the waste likely to be produced from demolition activities. The audit provided a clear, quantitative overview of anticipated waste streams and identified actionable opportunities for reclaiming, reusing, and recycling materials, guiding contractors to maximise resource recovery and circularity.
We identified 15 major construction materials and products including concrete, glass, wood, metal, and others for prioritised reuse, circular recycling, and diversion from landfills. By integrating circular economy principles, the project reduces demand for new raw materials, diminishes waste disposal volumes, and significantly lowers embodied carbon emissions associated with material extraction, manufacturing, transportation, and disposal.
LANDMARK ATRIUM, Hong Kong
Conclusion
Through these targeted initiatives and strategic actions ranging from bespoke embodied carbon assessment tools and structural design optimisation at West Bund, to comprehensive pre-refurbishment audits and circular material reuse strategies in Tomorrow’s CENTRAL. Hongkong Land demonstrates a robust and proactive approach to reducing embodied carbon emissions. We will continue to make significant strides towards sustainability targets 2030.
From Globalism to Regional Resilience: How Tariffs are Redefining Capital Flows in Asia
Amidst the resurgence of tariffs, investors are now recalibrating strategies to favour supply chain resilience and markets with policy stability, notably Japan, Australia, and India. While sectors such as high-spec logistics, R&D infrastructure, and alternatives continue to attract interest, regions heavily dependent on U.S. trade remain vulnerable to shifting policies.
This trend marks a broader strategic pivot from global efficiency toward regional resilience, with capital increasingly aligned to adaptable asset classes and diversified portfolios.
CBRE conducts the Asia Pacific Cap Rate Survey with our capital markets brokers and valuers every six months to obtain insights into current capital markets trends and sentiment along with the latest cap rate movements across individual markets and sectors. This report summarises the survey’s key findings.
Below are the key highlights:
Commercial real estate investment got off to a strong start this year, rising 11% year-on-year to US$33 billion in Q1 2025 on the back of declining interest rates and asset repricing.
Bifurcation in cap rates was observed across the region. Australia’s shopping malls experienced cap rate compression, while cap rates in Greater China continue to experience expansion pressure.
In response to tariffs, some 60% of respondents expect investors to reassess the pace of purchasing activity. Mainland China, Hong Kong, and Singapore investors were extremely concerned about the impact of tariffs, while those in Korea, Australia, India, and Japan were somewhat concerned.
Private (28%) and institutional (12%) investors continued to display the strongest buying intentions. Buying intentions for REITs and real estate funds strengthened from six months previously.
Net buying intentions were highest in New Zealand (77%) and Australia (48%). Japan attracted the strongest interest from cross-border investors.
Elevated yields / favourable pricing (63%), potential for rental uplift (44%) and healthy or improving occupancy/rent roll stability (36%) were named as the top three opportunities to improve investment returns.
Interest in multifamily & build to rent increased significantly (44% vs. 34%) from six months ago, with Japan, Greater China and Australia the main markets of interest. Demand for neighbourhood shopping malls (24% vs. 12%) also picked up from the Q3 2024 survey.
Data centres (63%) were the clear favourite among alternatives.
The Asia Pacific (APAC) real estate sector continues to exhibit moderate growth accompanied by notable progress in the housing segment, industrial and commercial market and sustainable real estate transformation. Strategic improvements in construction practices have also positioned this sector as a key driver of transformation, simultaneously shaping the evolution of real estate projects across the region.
The APAC real estate sector is progressively adopting eco-friendly innovations mainly through investments in renewable energy projects and sustainable urban development. This shift is evident in the evolving real estate regulations within the region for the last three months (December 2024 – February 2025). Countries such as Australia and Singapore have implemented policies and initiatives to foster the adoption of green energy, enhancing the growth and environmental responsibility of their real estate markets. Additionally, the region saw notable growth in commercial and industrial real estate, supported by fundings and redevelopment plans for business and commercial projects.
Aligned with these strategic advancements, APAC economies, including Australia, Singapore, China, Hong Kong, Japan and India, present promising opportunities for investors, driven by regulatory reforms designed to attract various asset classes and types. These nations are expected to play a significant role in directing regional investments and promoting growth in the coming months.
Overall: We still believe that the interest rate tailwind of slower global growth will support REITs in Asia especially Australia, Singapore and even Hong Kong (see fall in HIBOR). CPI in our region outside of Japan has been trending very much in the right direction.
Japan (+7% in USD in April): The major developers will publish their annual results in May. After that it will be quiet until October and we see only limited upside potential. We have therefore added to REITs and bought Japan Real Estate Investment Corp.
Australia (+9%): We continue to favor names like Stockland and Mirvac as we anticipate residential volumes to recover as the RBA cuts throughout the year. We are positive on self-storage due to continued population growth, and potential for more consolidation of unlisted, smaller players.
Hong Kong (+2.3%): Money market rates continue to fall, the 1M HIBOR is below 2% now. For the short-term refinanced companies in Hong Kong a strong tailwind.
Singapore (1.7%): We see continued drops in funding costs which will help earnings and fuel acquisition growth for some names that have strong costs of capital. With 1Q updates behind us, we see limited negative catalysts for the sector.
