APAC real estate investment surges to highest quarterly level since 2021

Investments soared by 64.7% vs last year to reach nearly US$65 billion in Q1.

Asia-Pacific real estate investment extended its recovery in Q1 2026, reaching US$64.6 billion, up 13.0% quarter-on-quarter and 64.7% year-on-year, marking the strongest quarterly performance since Q4 2021, according to Knight Frank.

The firm said the rebound reflects a clear shift from price discovery to capital deployment, as institutional investors return with greater conviction for prime, income-resilient assets and larger-scale opportunities.

Knight Frank Head of Capital Markets Asia-Pacific Daniel Dixon said the recovery signals an inflection point, with investors focusing on quality assets that offer liquidity, stable income and clearer execution pathways, despite ongoing macroeconomic risks.

Office assets led sector activity, with investment volumes rising 46.7% year-on-year to US$23.5 billion. Knight Frank said this reflects renewed interest in prime office properties across developed markets, supported by improving leasing conditions and rental growth in 18 of 24 Asia-Pacific cities.

Regional prime office rents increased 0.8% quarter-on-quarter, while the widening performance gap between Grade A and older assets is driving repositioning opportunities. Notable transactions included Mirae Asset’s US$1.05 billion acquisition of G1 Seoul Buildings A and B in South Korea, and Allgreen Properties’ reported purchase of 78 Shenton Way in Singapore for about US$473 million.

Cross-border investment more than doubled year-on-year to US$22.4 billion, rising 56.3% from Q4 2025 and accounting for 34.8% of total regional volumes. Sovereign wealth funds and institutional investors drove much of the activity, with combined investment reaching US$12.8 billion, up nearly 50% from a year earlier.

Japan remained the top destination for inbound capital, attracting US$6 billion, supported by tight vacancy in prime office assets, stable leasing demand and limited new supply. Major deals included Brookfield Asset Management’s acquisition of the Dentsu Headquarters Building for nearly US$2.0 billion, alongside GIC and Tosei Asset Advisors’ US$372.6 million purchase of Sankei Real Estate.

Singapore saw a standout surge in cross-border investment, rising to US$5.7 billion from under US$1 billion a year earlier. The increase was largely driven by Hongkong Land’s spin-off of a portfolio of office and retail assets into a private fund backed by QIA and APG Group, a transaction accounting for nearly one-fifth of Asia-Pacific cross-border volumes. Retail activity also strengthened, including Hines’ US$337 million acquisition of Bukit Panjang Plaza from CapitaLand Integrated Commercial Trust.

South Korea ranked third, with cross-border inflows rising 45.0% year-on-year to US$1.4 billion. Logistics assets accounted for 38.8% of activity, reflecting steady demand and moderating supply. Key deals included KKR’s US$201.1 million acquisition of Shinsegae Food Hub.

Looking ahead, Knight Frank expects investment activity to remain steady but increasingly selective in Q2 2026. The firm noted that geopolitical risks, particularly in the Middle East, could affect inflation and financing conditions. A short-lived disruption would likely delay capital flows temporarily, while a prolonged conflict could keep rates higher for longer and weigh on momentum.

Despite this, Knight Frank said well-located core assets in safe-haven markets are expected to remain in strong demand, with any shifts in rate expectations more likely to slow transaction volumes rather than derail the broader recovery.