The Asia-Pacific commercial real estate market witnessed a historic surge in investment during the third quarter of 2025, reaching a record high of US$63.8 billion, according to Knight Frank’s latest Capital Markets Insights report. This figure represents a 56.8% increase compared to the same period last year, signalling a strong rebound in investor confidence supported by policy clarity, rate cuts, and stabilising capital markets.
The growth nearly doubled the volumes seen in the previous quarter, driven by several major entity-level transactions and the completion of deals delayed due to extended due diligence periods. Christine Li, Head of Research for Asia-Pacific at Knight Frank, said that Q3’s performance “marks a genuine market revival” as investors increasingly focus on active asset management and income growth rather than cap rate compression. She added that substantial capital is now being directed toward strategic and defensive sectors such as living spaces and logistics.
Year-to-date, Asia-Pacific transaction volumes have already reached 80% of the total recorded in 2024, and full-year figures are expected to exceed US$195 billion, marking an approximate 10% annual growth.
Cross-border investments also gained significant momentum in the third quarter, totalling US$17.8 billion, which is 72.1% higher than Q2 and 28.6% higher year-on-year. Australia led the region in attracting foreign capital with US$5.0 billion, largely targeting the living and industrial sectors. Japan followed with US$3.5 billion directed toward office and multifamily assets, while South Korea drew US$2.3 billion, mainly into industrial and office properties. Dan Dixon, Head of Capital Markets for Asia-Pacific at Knight Frank, noted that cross-border investors remain confident in the fundamentals of the region’s key markets, with constrained supply and stabilising prices presenting attractive long-term opportunities.
South Korea posted the region’s strongest growth, with total transaction volume rising to US$14.3 billion, a 93.6% increase year-on-year. Office assets made up more than 70% of this figure, with landmark deals such as the Pangyo Tech One Tower, which sold for US$1.42 billion, setting a national record. Major foreign investments included BentallGreenOak’s US$625 million purchase of Tower 730 from Hyundai Investments and Aberdeen’s US$427 million acquisition of Pacific Tower.
China’s mainland recorded US$13.5 billion in investment activity, up 29.9% year-on-year, driven largely by Bain Capital’s US$3.9 billion divestment of WinTriX DC Group’s data centre business. Australia registered US$9.5 billion, up 87.8%, supported by stabilised pricing and renewed activity across multiple cities, particularly Melbourne. Singapore’s investment volume reached US$3.8 billion, up 28.6%, boosted by large-scale transactions including Keppel Land’s US$356 million purchase of Jem’s office component and UOL Group’s US$292 million sale of Kinex.
Sector-wise, office transactions led the market with US$23.7 billion, a 64.2% increase year-on-year, driven by limited new supply and rising rental values. Industrial investment stood at US$10.7 billion, down 3.7%, though South Korea defied the regional slowdown with 38.6% growth due to easing oversupply concerns. Hotel investments rebounded to US$6.2 billion, marking a 67.7% rise, while retail volumes fell 13.4% to US$7.7 billion as investors maintained a cautious stance amid global trade uncertainties.
Looking ahead, Knight Frank expects investment momentum to remain strong in the final quarter of 2025, supported by clearer monetary policy direction and improved liquidity. While recent U.S. tariffs on Chinese goods continue to impact sentiment, the record-breaking performance in Q3 highlights the underlying resilience of Asia-Pacific’s property markets. Christine Li added that while industrial and retail sectors may face short-term challenges, Japan continues to stand out as a “policy-anchored beneficiary,” offering attractive yields, inflation-hedging potential, and steady demand across multifamily and logistics assets in Greater Tokyo and Osaka.
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