Mumbai, 29th October, 2025: Asia-Pacific commercial real estate investment volumes reached USD 63.8 billion in the third quarter of 2025, marking the highest level on record and a 56.8% increase on the same period last year, according to Knight Frank’s Q3 2025 Capital Markets Insights released today.
The growth in activity nearly doubled the volumes recorded in Q2. This was driven by several major entity-level transactions and the completion of deals that had been delayed by extended due diligence periods.
Christine Li, Head of Research, Asia-Pacific, Knight Frank, says “Q3 2025’s record US$63.8 billion transaction volume marks a genuine market revival in Asia-Pacific, driven by policy clarity and capital rate stabilisation. Investors are shifting from cap rate compression strategies to external factors such as active asset management and income growth. This renewed confidence is directing substantial capital into strategic, defensive sectors such as the living sectors and logistics.“
Year-to-date transaction volumes have already reached 80% of 2024’s full-year total, with Asia-Pacific investment expected to surpass USD 195 billion in 2025, representing a 10% increase year-on-year.
Cross-border investment into the region totalled USD 17.8 billion during the quarter, up 72.1% from Q2 and 28.6% year-on-year.
Australia attracted the highest volume of cross-border capital at US$5.0 billion, primarily directed to the living and industrial sectors. Japan followed with US$3.5 billion, concentrated in office and multi-family assets, while South Korea secured US$2.3 billion, predominantly in industrial and office properties.
Dan Dixon, Head of Capital Markets, Asia-Pacific, Knight Frank, says, “Cross-border investors are increasingly confident in the fundamentals behind key Asia-Pacific markets. Constrained future supply, particularly for institutional-grade office and logistics assets, combined with stabilising prices create compelling investment opportunities. What is particularly encouraging is the breadth of activity. We see strong deal flow across offices, industrial, and living sectors, reflecting genuine structural demand rather than opportunistic plays.”
South Korea posts strongest regional growth
South Korea led the region with USD 14.3 billion in transactions, up 93.6% year-on-year, recording the highest growth rate across Asia-Pacific markets.
Office assets accounted for 70.9% of South Korea’s total volume, as sellers moved to divest ahead of potential CBD oversupply, while rental growth expectations remain positive. The Pangyo Tech One Tower achieved the highest-ever transaction price in South Korea’s office market history at US$1.42 billion. Foreign investors were active in Seoul’s office market, with BentallGreenOak (BGO) acquiring Tower 730 from Hyundai Investments for US$625 million and Aberdeen purchasing Pacific Tower from Pebblestone AMC for US$427 million.
Meanwhile, interest in industrial assets strengthened as the slowdown in new warehouse construction eased earlier oversupply concerns. International capital remains particularly focused on industrial opportunities offering value-add potential.
The Chinese mainland recorded USD 13.5 billion in investment volume, rising 29.9% year-on-year, with data centres representing nearly one-third of total volume activity. This was driven mainly by Bain Capital’s divestment of data centre operator WinTriX DC Group’s Chinese mainland business to a consortium led by Guangdong Hec Technology for US$3.9 billion.
Australia registered US$9.5 billion, up 87.8% year-on-year, supported by pricing stabilisation and renewed deal flow across multiple cities beyond Sydney. Activity in Melbourne strengthened, highlighted by Assembly Funds Management and PGIM Real Estate’s US$289.3 million acquisition of Woodgrove Shopping Centre from QIC and PAG’s US$163.8 million acquisition of the Flinders Gate Complex.
Singapore posted US$3.8 billion in investment volume, up 28.6% year-on-year, driven by the completion of several large-scale transactions. Major deals included Lendlease Global Commercial REIT’s US$356 million sale of Jem’s office component to Keppel Land, and UOL Group’s US$292.3 million divestment of Kinex to Kinex Times Square and Xiaohong Property Management.
Sector performance reflects mixed trends
Office transactions drove regional sector activity with US$23.7 billion in volume, up 64.2% year-on-year. With limited new supply coming to market in major CBDs, rental and capital values are expected to continue climbing.
Industrial investment totalled USD 10.7 billion, down 3.7% year-on-year, though South Korea defied the broader trend with volumes rising 38.6%. Easing supply concerns, particularly in the Greater Seoul Metropolitan Area, where new warehouse development has slowed, helped drive renewed investor interest.
Hotel transactions rebounded strongly to USD 6.2 billion, up 67.7% year-on-year, while retail volumes totalled USD 7.7 billion, down 13.4% year-on-year as investor sentiment remained measured amid global trade uncertainties.
Outlook
Investment momentum across Asia-Pacific is expected to hold firm into the final quarter of 2025, supported by clearer monetary policy direction and improved liquidity.
While recent US tariffs on the Chinese mainland continue to weigh on sentiment, Q3’s record performance demonstrates underlying market strength. Capital rate stabilisation will likely encourage greater deal flow in Q4 as underwriting confidence improves.
Christine adds, “Industrial and retail assets may face near-term headwinds as policy adjustments take effect, but the fundamentals remain sound. Amid this capital re-allocation phase, Japan stands out as a policy-anchored beneficiary. Its yield spreads remain comparatively attractive, and despite gradual monetary tightening, rental fundamentals are supported by sustained urbanisation. We are seeing international capital increasingly targeting multifamily and logistics assets in Greater Tokyo and Osaka, drawn by Japan’s inflation-hedging characteristics and relative stability in an otherwise volatile environment.”
