REGIONAL OVERVIEW

Asia

Africa

Asia ↓

Australia and New Zealand

Europe

Middle East

North America

South America

UK

OPPORTUNITIES

Global trade uncertainty opens up new opportunities across Asia

Asia’s real estate market is flexing its resilience and agility, adapting to volatile economic pressures and geopolitical uncertainty to drive impressive, sustained growth across most of the region. While traditionally active cities for construction are holding steady, despite market challenges, emerging markets are finding even more new opportunities to grow.

The picture for construction in Asia is one of rapid change. The region’s fastest-growing real estate sectors remain industrial manufacturing, data centres and the transport infrastructure to support countries’ major development in these areas and elsewhere.

Yet a closer look at where, geographically, real estate investment is being directed shows an accelerating divergence from the norm. Emerging markets in particular are demonstrating a growing ability not just to withstand global shocks and uncertainty but to capitalise on them.

Established real estate markets, such as Japan and Singapore, continue to grow, supported by their long-standing positions as global business hubs and centres for tourism, and their comparatively strong economies. A third of the top 15 most expensive global markets to build in are in Japan, with Tokyo ranking at an average of US$4,647 per m². This growth has been driven largely by continued expansion of the country’s data centre market and other high-tech industries, as well as urban development and expanded investment in leisure and hospitality, including the recent hosting of EXPO 2025 in Osaka.

Breakdown data

Data: Tendering conditions

Learn more

Data: Key challenges

Learn more

Data: Supply chain

Learn more

Data: Labour

Learn more

Data: Digital (BIM)

Learn more

Top performing sectors

Data centres

Industrial, manufacturing and distribution

Transport and mobility (road, rail, airport and ports)

Nearshoring to mitigate tariff shocks

Construction cost inflation across Japan’s major cities is expected to run at 5.6 percent through 2025. The nation’s traditional reliance on international trade partners and the current geopolitical context may see investment stutter and we expect construction cost inflation to settle slightly to 5.5 percent in 2026. Against this sticky cost escalation and the potential impacts of US tariffs, clients in the market are beginning to reassess supply chains and identify opportunities to nearshore the procurement of materials and ensure project delivery.

This trend is echoing elsewhere, opening opportunities for manufacturing sectors in Asia’s key markets, as the region works to increase its self-sufficiency. China is naturally benefitting from increased trade from neighbouring countries. Official figures revealed its industrial output increased by 5.8 percent in 2024. However, its real estate sector continues to struggle against chronic issues, which is adding to uncertainty over its economic direction. With demand softening, construction cost inflation across almost all Chinese markets is expected at 1.0 percent this year and into next.

Other manufacturing hubs are experiencing a resurgence, particularly in Southeast Asia. Markets like Vietnam and Malaysia are taking advantage of a surplus of Chinese supply, initially bound for the US, to accelerate delivery, manage costs and increase their own manufacturing capacity.

Average construction costs remain comparatively low at US$1,147 per m² in Hanoi and US$1,168 in Ho Chi Minh, for example, which should encourage continued investment. The growth of manufacturing in these markets is also set to benefit wider real estate, including data centres, transport and residential as investment is funnelled into building the connectivity, homes, workplaces and transport infrastructure to support more prosperous trade.

INSIGHT "Red tape and uncertainty around economic and political instability remain two of the most prominent barriers to investment and top our table of challenges for the region."

Building new hubs for global business

India enjoys significantly lower construction costs (for example, US$723 per m² in Mumbai) than traditional hubs in the region such as Hong Kong (US$4,377) and Singapore (US$3,104), as well as more closely aligned markets like Vietnam. Paired with an increasing profile on the global stage and growing pools of highly educated yet affordable talent, these low costs are helping to make India an increasingly attractive place for international businesses to establish bases. In recent years, India has witnessed construction of Surat Diamond Bourse, the world’s largest office complex, and in February, Google opened its new Ananta complex in Bangalore.

The repositioning of international business hubs presents an opportunity across the region – with commercial fit-outs having risen from the ninth to the fifth fastest-growing construction sector in Asia over the past year, showing the post-pandemic recovery of the office sector.

This also brings with it a push for urban renewal and development, including investment in residential, leisure and hospitality, driven by growing populations and increasing expectations around living standards and climate resilience. Vietnam, for example, whose economy grew by 7.1 percent in 2024 according to the World Bank, is seeing a rapidly expanding middle class and a greater shift to urbanisation.

Optimising skills to meet demand

Heightened demand is being reflected in comparably high and sustained construction cost inflation in the region, of as much as 6.0 percent in Mumbai and New Delhi. While these markets’ low costs provide some room for buffer, clients will need to consider and identify efficiency gains to keep a handle on viability and profitability. Skills is a particularly crucial part of this puzzle.

Much of the region benefits from a plentiful supply of manual labour – and in emerging markets, this talent is particularly affordable. In Bangalore, for example, the average hourly wage is US$1.5.

However, a shortage of specialist skills reported across most of the region’s markets threatens its ability to deliver on demand in the short and long term. Upskilling domestic workforces where possible will be especially important for emerging markets to capitalise on improving education standards and counter a long-running brain drain to more affluent countries like Japan.

Growing competition for resources within Asia – and from neighbouring regions with major development pipelines such as the Middle East – is set to put labour costs on an upward trajectory. Investment in digital tools must therefore become a priority to improve productivity. Fast progress around digital integration is already being made in markets where skills are both in short supply and expensive.

The greater test will be whether organisations working in cheaper labour markets will push to stay on the front foot and embed increased value in supply chains now, or wait until a capacity crunch truly bites before investing to play catch up.