Spread the love

Post Views: 24

The Asia-Pacific living sector has moved from a promising corner of real estate into one of the region’s most closely watched investment plays. And, unlike some property themes that arrive wearing a glossy brochure and leave with the first rise in interest rates, this one has shown rather more backbone.

A new CapitaLand Investment report argues that flexible living, including multifamily housing, purpose-built student accommodation, built-to-rent and coliving, is being driven by basic needs rather than passing fashion. People still need somewhere to live. Students still need beds. Young workers still move to cities. That may not sound revolutionary, but in a nervous market it is close to a luxury.

The numbers are difficult to ignore. CapitaLand Investment says APAC living was the only major real estate sector to post investment growth during both the COVID-19 shock and the global rate-rise cycle. Investment rose 51 per cent during the pandemic comparison and 18 per cent through the later rate-hike period. In 2025, regional living investment climbed 38 per cent to US$13.8 billion.

That record has pushed the sector firmly onto the institutional radar. Japan multifamily once made up about three-quarters of APAC living investment. By 2025, its share had eased to around half as capital spread into Australian student housing and built-to-rent, Singapore coliving, Hong Kong student accommodation and Korea’s emerging rental market.

Yet the report’s sharpest line is also its most useful: “Structural demand is no longer the differentiator, execution is.” In other words, seeing the housing shortage is the easy part. Building the right product, in the right place, under the right rules, at a cost that still leaves a return is where the clever money earns its keep.

Australia’s student housing gap grows teeth

Australia is one of the clearest examples. International education remains a major export industry, while domestic students are also more willing to cross state borders for study. Both groups need housing near universities, transport and work. The report says Australia’s international student population increased by 20 per cent between 2018 and 2025, while the proportion of local students studying interstate rose from 12 per cent in 2009 to 21 per cent.

There is, however, an important data correction. The CapitaLand report cites a contribution of A$59.5 billion from international education in 2025. The latest Australian Government and Australian Bureau of Statistics figures put calendar-year 2025 education export income at A$54.998 billion. That is still an immense sum, but accuracy should never be asked to share a room with enthusiasm.

Policy is also shifting. The Australian Government set the 2026 National Planning Level at 295,000 new international student places, 25,000 above the 2025 level. It has since confirmed the same ceiling for 2027. The result is not an open-slather return to the old days. It is managed growth, with housing supply, market diversity and links with Southeast Asia placed higher on the agenda.

The accommodation gap remains stark. CapitaLand Investment estimates that only about six in every 100 students in Australia can access purpose-built student accommodation. The comparable figure is 29 in the United States and 45 in the United Kingdom. Around 28,000 new Australian beds are forecast between 2026 and 2028, but penetration would still rise only to about 8 per cent.

That is the sort of shortage that tends to keep both operators and investors awake, though for rather different reasons.

Private rental markets offer little relief. The report places metropolitan apartment vacancy at just 1 per cent in the first quarter of 2026. It also records average PBSA rent growth between 2018 and 2025 of 50 per cent in Sydney, 38 per cent in Melbourne, 36 per cent in Adelaide and 28 per cent in Brisbane.

Capital has noticed. Australian PBSA investment reached A$1.2 billion in 2025, its second-highest annual level after 2020. Yet the market remains hard to enter. There are too few operating assets, development costs are high, sites are scarce, and planning can move at the speed of a committee deciding where to hold its next committee.

Coliving is beginning to fill part of the gap. Young professionals priced out of standard rentals are looking at smaller rooms, shared facilities, flexible leases and bills rolled into one payment. Sydney holds 83 per cent of the national coliving pipeline identified in the report. Larger schemes are also coming forward, with proposed projects averaging 130 units, compared with 37 units in completed projects.

Japan proves mature does not mean finished

Japan remains the region’s anchor market. Its national population may be falling, but Tokyo and Osaka continue to draw students, young workers and overseas residents. These groups are more likely to rent, especially near rail and employment hubs.

The report says renter penetration is about 40 per cent, while apartments across Tokyo’s 23 wards held occupancy of 96 to 97 per cent. Rents rose 7.1 per cent in 2025. That is a powerful reminder that national demographic headlines do not always describe what is happening street by street.

The investment task, however, is changing. Stabilised yields remain around the mid-3 per cent range. Investors can no longer rely on cap-rate compression to do the heavy lifting. They need good transport links, compact design, sensible shared space, flexible leases and close control of operating costs.

Japan, in short, is not maxed out. It is simply less forgiving of lazy ownership.

Singapore turns coliving into serious business

Singapore’s coliving market is also shedding its early image as a lifestyle niche for people who like communal kitchens and very tidy Instagram accounts.

Foreign residents, young professionals, project workers and international students form a strong tenant base. The report says foreign resident numbers rose 30 per cent between 2021 and 2025. Students can account for 25 to 40 per cent of residents at some coliving operators.

Supply grew 17 per cent from 2023 to 2025, mainly through the reuse and conversion of existing buildings. Even so, coliving represents only about 6 per cent of Singapore’s public and private rental stock, while occupancy generally sits between 85 and 95 per cent.

The policy framework is becoming clearer. Singapore’s Serviced Apartments II model allows professionally managed long-stay rental accommodation with a minimum three-month stay. It gives the sector a more formal route to growth, although high land prices still demand strict buying discipline.

CapitaLand Investment says S$1.4 billion flowed into Singapore coliving between January 2022 and August 2025, much of it tied to adaptive reuse. That makes old hotels, expired master leases and tired buildings more than yesterday’s problem. In the right hands, they can become tomorrow’s rooms.

Hong Kong opens the conversion door

Hong Kong’s student housing story is being shaped by education policy and a shortage of beds. The territory has raised the non-local undergraduate quota at publicly funded universities, with the ceiling due to reach 50 per cent from the 2026–27 academic year.

The report forecasts a shortfall of 70,000 to 90,000 student beds by 2028–29. It also says some PBSA assets posted annual rent rises of around 8 per cent between 2023 and 2025.

The government’s Hostels in the City Scheme, launched in July 2025, is designed to make it easier to turn commercial buildings into student accommodation. Planning relief, more flexible conversion rules and support for shared amenities have improved project viability.

Investment responded quickly. Student housing transactions more than doubled from HK$1.3 billion in 2024 to HK$3.3 billion in 2025. Hotels may prove especially useful for conversion because their layouts, natural light and ventilation often suit residential use better than older offices.

Korea offers promise with a rule book attached

Korea is earlier in the cycle. Seoul’s single-person households rose from 30 per cent to almost 40 per cent between 2016 and 2025. At the same time, tenants have been moving away from jeonse, the large-deposit rental system, and towards monthly rent, known as wolse. Monthly leases accounted for more than 60 per cent of Seoul transactions in 2025.

Institutional rental housing still makes up less than 5 per cent of total stock. That leaves room for growth, but regulation is not a decorative footnote. Holding periods, rent caps, loan rules, tax changes and strict design standards can all alter the sums.

The best openings may come through ground-up rental projects, office-to-dormitory conversions and the repositioning of hotels or serviced apartments. Early movers may gain valuable operating skill and local networks, but only if they read the fine print before reaching for the champagne.

The real prize is operational skill

Across APAC, the demand case is now well established. Urban growth, smaller households, migration, student mobility and poor affordability are pushing more people towards rental housing. At the same time, high construction costs, expensive finance, labour shortages and planning delays are holding back supply.

That combination supports occupancy and rent growth, but it does not guarantee a good investment. The report argues that returns will increasingly come from revenue management, product design, local knowledge, active asset management and scale.

The lines between hotels, student housing, built-to-rent and coliving are also starting to blur. A hotel can become coliving. An office can become a dormitory. A student property can serve recent graduates. The winning assets will be those designed around how people actually live, not how a spreadsheet once said they should.

For travel and hospitality businesses, the shift matters. Extended-stay guests, mobile workers, students and younger renters increasingly want flexible terms, useful shared areas and service without the full hotel price tag. That places lodging operators, accommodation brands and real estate investors on increasingly common ground. Singapore’s coliving sector is already capturing longer-stay demand from business travellers and visitors seeking residential-style accommodation with broader amenities.

The APAC flexible living boom is therefore not merely a property story. It is a story about mobility, education, work and the changing shape of urban life. Demand has opened the door. Execution will decide who gets the room.