As inflation eases and interest rates gradually decline, 2026 is shaping up as a more supportive year for real estate capital. Forecasts point to modest but resilient global growth, improving affordability, and a recovery in transaction volumes, particularly in markets where demographics, infrastructure spending, and policy reforms align.

1. Interest Rates and Buyer Activity

Central banks in several advanced and emerging economies are expected to continue a controlled rate-cutting cycle into 2026, which improves mortgage affordability and refinancing conditions. Lower borrowing costs typically stimulate residential transactions and reduce financing pressures for investors.
Strategic regions benefiting: Malaysia, Thailand, Vietnam, UAE and Saudi Arabia, where monetary policy and household demand remain relatively constructive.

2. Secondary and High-Growth Cities

Capital is rotating from expensive global gatekeepers toward secondary and rising cities with stronger affordability and infrastructure upgrades. Southeast Asia demonstrates this shift with accelerating urbanisation, young populations and improving transport networks.
Strong examples: Ho Chi Minh City and Hanoi in Vietnam, Bandung and Surabaya in Indonesia, Penang and Johor in Malaysia, Greater Bangkok in Thailand and tier-two tech corridors in India.

4. Supply Constraints and Affordability

Construction pipelines remain limited due to financing costs and labour constraints, particularly in rapidly growing cities. When population growth or foreign demand remains strong, constrained supply supports rental growth and long-term capital values.
Investment angle: Residential and rental housing in Vietnam, Malaysia, Indonesia and the UAE continue to show healthy absorption rates and favourable replacement economics.

5. Alternative Property Sectors

Investors are increasingly directing capital to sectors tied to long-term structural demand such as logistics, data centres and healthcare or education-linked real estate. These assets deliver longer leases and diversified income streams.
High-potential plays:
Singapore and Johor for data centres due to cloud investment and power availability.
Dubai and Riyadh for logistics and industrial linked to e-commerce and trade.
Bangkok and Kuala Lumpur for healthcare, student living and senior living opportunities.

6. Affordable and Purpose-Built Rentals

Affordability pressures in major Southeast Asian and Gulf cities are supporting
investor interest in build-to-rent, multi-family and long-stay serviced apartments.
These sectors provide defensive rental income, extended tenancy duration and strong occupancy resilience.

7. Technology and AI in Real Estate

Adoption of AI and data platforms is improving underwriting, pricing transparency
and cross-border transactions. Digital tools are widening access to international
markets and enabling investors to compare yields, occupancy and risk in real time.

Macro Risks to Monitor
The recovery trajectory remains uneven across regions. China’s ongoing property
adjustment continues to weigh on sentiment in North Asia. Geopolitical uncertainties
and public debt pressures may occasionally disrupt capital flows. Strong balance sheets
and income visibility remain key.