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As sustainability becomes a key pillar of long-term value creation in real estate, CapitaLand Investment (CLI) has developed a proprietary Return on Sustainability (RoS) framework to rigorously assess the financial impact of green capital expenditure.

Designed as a data-driven, decision-making tool, the RoS framework evaluates eight key variables that influence financial performance: green capital expenditure (capex), utility savings, carbon cost reductions, rental premiums, longer leasing durations, lower interest rates, reduced insurance premiums, and enhanced asset valuations. By quantifying both risks and returns, this model equips asset managers with a holistic view of the tangible value that sustainability initiatives can unlock.

More than a reporting metric, the RoS framework serves as a capital allocation compass - guiding decisions on investment, asset-level budgets, cost-benefit analysis for asset enhancement initiatives or redevelopments. In an environment where regulatory standards, investor expectations, and climate resilience are evolving rapidly, having a structured methodology to assess the financial case for sustainable investments is not just prudent - it is essential. CLI’s RoS framework bridges the gap between environmental responsibility and financial accountability, ensuring that decisions around sustainability are grounded in both environmental intent and financial discipline.

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Overview: Asian real estate securities are up 17.53% YTD in USD, supported by recovering REITs/Developers, positive FX, and falling rates reigniting investor interest. Lower borrowing costs in Asia ex-Japan enable earnings upgrades and accretive acquisitions, while a weak USD, low growth, and falling rates continue to support positioning in the sector.

• Japan: JREITs up 11.9% since January but still trade at a 13% NAV discount. Ongoing asset sales and buybacks continue, while BOJ remains cautious amid US-Japan trade tensions. Fundamentals in Office and Hotels remain strong, and rising construction costs are limiting new supply.
• Australia: The RBA is expected to cut rates later this year, with inflation within target and labour markets softening and part-time jobs declining. We are maintaining overweights in Residential-Diversified, Retail, and Self-Storage. Macro data is expected to drive prices ahead of August earnings.
• Hong Kong: HK real estate stocks rose over 20% in H1 2025, supported by falling rates, recovering retail, residential and tourism activity, and underweight investor positioning. HK Land has led gains on asset sales, buybacks, and dividend enhancement, while large-cap developers remain at wide NAV discounts.
• Singapore: Large-cap SREITs are trading at 2025 highs, supported by falling rates reducing refinancing costs and enabling DPU-accretive deals. The recent NTT Global Data Center REIT IPO was 2.5x oversubscribed with an initial 7.5% yield. New residential cooling measures are unlikely to materially impact the sector.

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The Asia-Pacific Horizon report synthesises fast-moving developments under Trump 2.0 and offers strategic guidance for navigating the turbulence

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The 2025 CBRE Asia Pacific Logistics Occupier Survey reveals a landscape of cautious optimism among occupiers, shaped by ongoing geopolitical tensions and shifting global trade dynamics. While short-term business confidence has dipped—particularly due to tariff uncertainties and regulatory challenges—long-term expansion plans remain intact.

Key findings highlight a growing trend toward diversification of supply chains, an increase in outsourcing, and a pivot toward asset-light strategies to mitigate risk and manage costs. Occupiers are showing strong interest in emerging economies, with India standing out for its robust occupier sentiment, while mainland China continues to grapple with oversupply despite signs of stabilisation.

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