APAC Real Estate Investment Volumes Hit US$63.8 Billion In Q3: Report

Asia-Pacific’s commercial real estate market is seeing a historic revival. Investment volumes surged to a record US$63.8 billion in the third quarter of 2025, up nearly 57% from the same period last year, according to Knight Frank’s Q3 2025 Capital Markets Insights report. This is the highest quarterly total ever recorded for the region.

The rebound was driven by several major mergers, acquisitions, and large-scale transactions that had been delayed earlier in the year due to extended due diligence. The result is a wave of activity that nearly doubled the investment seen in the previous quarter.

Christine Li, Head of Research for Asia-Pacific at Knight Frank, called the third quarter’s performance a “genuine market revival.” She said, “Record transaction volumes reflect renewed confidence, clearer policies, and stabilised capital rates. Investors are now focusing less on short-term price gains and more on income growth and active asset management. That shift is channeling major capital into resilient sectors such as living spaces and logistics.”

With nine months of the year completed, investment volumes have already reached 80% of 2024’s full-year total. Knight Frank projects that the region could surpass US$195 billion in total investments by the end of 2025, around 10% higher than last year.

Cross-border capital returns, led by Australia

Cross-border investors are once again turning their attention to Asia-Pacific’s real estate markets. International investment totalled US$17.8 billion in Q3, a 72% jump from Q2 and nearly 29% higher year-on-year.

Australia emerged as the top destination, attracting US$5 billion in foreign investment, mainly in residential and industrial projects. Japan followed with US$3.5 billion, focused on offices and multifamily housing, while South Korea secured US$2.3 billion, largely in industrial and office assets.

Dan Dixon, Knight Frank’s Head of Capital Markets for Asia-Pacific, said that cross-border investors are increasingly confident about the fundamentals driving the region’s key markets. “Tight supply of high-quality office and logistics properties, combined with stabilising prices, is creating strong opportunities,” he said. “We are also seeing broader deal activity across offices, industrial, and living sectors, signs of genuine structural demand rather than short-term speculation.”

South Korea leads regional growth

South Korea posted the strongest performance of all markets, with transactions reaching US$14.3 billion, up an impressive 93.6% year-on-year. Office deals accounted for more than 70% of this total as sellers capitalised on rising values ahead of potential oversupply in central business districts.

The Pangyo Tech One Tower recorded the highest office transaction in South Korean history at US$1.42 billion. International investors remained active, with BentallGreenOak purchasing Tower 730 in Seoul for US$625 million and Aberdeen acquiring Pacific Tower for US$427 million.

Demand for industrial assets also strengthened as construction of new warehouses slowed, easing fears of oversupply. Investors are particularly interested in industrial sites offering “value-add” potential, properties that can be upgraded or repurposed to improve returns.

China, Australia, and Singapore remain strong performers

The Chinese mainland saw US$13.5 billion in investment activity during the quarter, up 30% year-on-year. Data centres accounted for nearly one-third of this, led by Bain Capital’s US$3.9 billion sale of WinTriX DC Group’s China operations to a consortium led by Guangdong Hec Technology.

Australia also recorded a strong quarter with US$9.5 billion in transactions, up 88% year-on-year. Improved price stability and renewed interest across multiple cities boosted deal flow beyond Sydney. Melbourne saw notable activity, including Assembly Funds Management and PGIM Real Estate’s US$289 million purchase of Woodgrove Shopping Centre and PAG’s US$164 million acquisition of the Flinders Gate Complex.

Singapore posted US$3.8 billion in investment, rising 29% year-on-year. Major deals included Lendlease Global Commercial REIT’s US$356 million sale of Jem’s office space to Keppel Land, and UOL Group’s US$292 million divestment of Kinex Mall to local investors.

Sector performance: offices dominate, hotels rebound

Office assets led the regional recovery, with total investments reaching US$23.7 billion, up 64% year-on-year. With limited new office supply in major city centres, both rental and capital values are expected to continue rising through 2026.

Industrial investment was slightly lower at US$10.7 billion, down 4% from last year, though South Korea bucked the trend with nearly 39% growth. The slowdown in new warehouse construction around Greater Seoul has reignited investor interest, suggesting that industrial demand remains fundamentally strong.

Hotels had a standout quarter with US$6.2 billion in deals, up nearly 68% year-on-year, as travel and tourism rebounded across Asia. Retail investments, however, fell 13% to US$7.7 billion as global trade uncertainty kept investors cautious about consumer-facing assets.

Outlook: steady growth ahead

Looking ahead, Knight Frank expects Asia-Pacific’s investment momentum to remain solid through the end of 2025. The combination of clearer monetary policies, stable interest rates, and improved liquidity is likely to sustain deal activity into Q4.

Christine Li noted that while some sectors face short-term challenges, fundamentals remain resilient. “Industrial and retail assets may experience temporary slowdowns, but Japan continues to stand out as a policy-driven safe haven,” she said. “Its yield spreads remain attractive, and investors are increasingly targeting multifamily and logistics properties in Tokyo and Osaka due to their stability and inflation protection.”

The record-breaking third quarter underlines a broader truth: Asia-Pacific’s commercial real estate is back in focus for global capital. After several years of volatility, investors are once again betting on the region’s long-term urbanisation, demographic strength, and infrastructure growth, marking a new chapter of confidence for 2025 and beyond.