APAC real estate investment jumps 13.7% to US$201b in 2025

Retail was the standout performer for the year.

Asia-Pacific real estate investment reached US$201 billion in 2025, marking a 13.7% increase year-on-year and hitting the forecast range of 10–15%, according to Knight Frank’s Q4 2025 Capital Markets Insights. The firm attributes the growth to stabilising interest rates and renewed investor confidence in high-quality, income-generating assets.

While overall quarterly investment in Q4 totaled US$56 billion, down 10% quarter-on-quarter and 7.4% year-on-year, Knight Frank notes that investors were more selective following a strong first nine months, focusing on prime assets with sustainable cash flows.

Retail emerged as a standout performer, with Q4 transaction volumes rising 109.5% quarter-on-quarter and nearly doubling year-on-year. Full-year retail investment increased 31.2% compared with 2024, underpinned by improving occupier markets and steady consumer demand. Major deals included Lendlease Global Commercial REIT’s US$476.2 million acquisition of a 70% stake in Singapore’s PLQ Mall from ADIA, and Dexus’ US$447 million purchase of a quarter share of Brisbane’s Westfield Chermside from Scentre Group.

Cross-border investment normalised after a strong 2024, declining 19% to US$46.8 billion, driven by geopolitical uncertainties, currency volatility, and a shift toward domestic acquisitions. Japan remained the largest recipient of international capital at US$16.2 billion, with office assets accounting for 37.4% of total volume, reflecting tight prime vacancy in Tokyo and limited new supply.

Australia followed with US$12.4 billion in investment, up 3.2%, while retail cross-border acquisitions rose to US$1.8 billion, including Keppel REIT and MA Financial Group’s US$343.6 million acquisition of Top Ryde City from Blackstone. South Korea saw US$6.3 billion in cross-border investment, up 23.7%, led by industrial assets such as KKR’s US$691.6 million purchase of the Cheongna Logistics Centre, the country’s largest logistics transaction to date.

Knight Frank highlights a clear theme among investors: “Cross-border investors are highly selective, targeting markets where supply constraints meet strong occupier demand,” said Christine Li, Head of Research, Asia-Pacific, Knight Frank. Prime Tokyo office, Australian retail, and South Korean logistics assets exemplify this approach, with rental growth potential driving capital allocation over yield compression.

Looking ahead, Knight Frank expects Asia-Pacific investment to rise 5–10% in 2026, concentrated in core markets including Japan, Australia, Singapore, and South Korea, with returns increasingly supported by fundamentals and rental growth rather than aggressive yield chasing.