The View | Why Asian real estate is safe from Trump’s tariff blitz

Trump’s tariffs will inevitably dampen sentiment towards Asian real estate, but domestic demand will act as a shock absorber

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People walk along Shibuya Crossing during snowfall in Tokyo on March 4. Japan’s safe-haven credentials, the boom in overseas tourism amid the plunge in the yen and growing confidence in reflation help explain why Tokyo was the best-performing commercial property investment market among the leading cities in Asia for the last three years. Photo: AFP

Published: 8:30pm, 7 Apr 2025

US President Donald Trump’s recklessness knows no bounds. On April 2, he announced new “reciprocal” tariffs on nearly all the US’ trading partners, raising levies to levels last seen with the enactment of the infamous Smoot-Hawley Tariff Act in 1930 that prolonged the Great Depression.

The new trade regime penalises countries with the largest bilateral surpluses with the United States. Among the 10 economies running the biggest surpluses, seven are in Asia. Although China’s exports to the US have fallen since Trump’s 2018-19 trade war, other Asian economies have become more dependent on trade with the US.

According to data from Morgan Stanley, South Korean, Japanese and Taiwanese goods exports to the US accounted for between 19 and 24 per cent of the three economies’ total exports last year. JPMorgan is right to describe the economic blow to Asia as an “outsized tariff shock”.

The mounting threat of a full-blown trade war – China responded swiftly by announcing tariffs of 34 per cent on all US imports – puts a premium on domestic demand as a counterweight to the damage wrought by the onslaught of protectionism.

In Asia’s commercial real estate sector, domestic demand is a key source of resilience in occupier and investment markets and an important theme shaping the performance and outlook for the industry. There are different facets to domestic demand, some of them less apparent than others.

The most obvious one is the expansion of the middle class. India has the best of both worlds. In the office market, strong demand from multinational firms tapping into the country’s vast talent pool to set up increasingly sophisticated global capability centres (GCCs) is fuelling leasing activity. In the first quarter of 2025, leasing volumes reached a record high of 28.2 million sq ft, with GCCs accounting for 44 per cent of demand, according to Knight Frank data.