Asia Pacific real estate draws $9.5B in cross-border investment

Singapore—According to Knight Frank’s latest Asia-Pacific Capital Markets Insights, regional cross-border investment in commercial real estate more than doubled in Q1 2025, rising 116.7 percent year-on-year to $9.5 billion.

This sharp increase stands out amid persistent global economic volatility and uncertainty around Trump’s tariff policies and reflects renewed investor confidence in the region’s real estate fundamentals, with Japan, Australia, and South Korea emerging as key destinations.

Sustained interest

Overall transaction volume in Asia-Pacific held steady at $33.4 billion in Q1 2025, easing 0.8 percent from the same period last year. However, it showed a sharper 17.1 percent decline from the strong activity in Q4 2024.

International investors remain active, with cross-border transactions accounting for 28.4 percent of all investment activity, the highest proportion since Q3 2023.

“Asia-Pacific’s real estate market held up well so far in 2025, with cross-border investment activity reflecting sustained interest, particularly in Japan, Australia, and South Korea. Stabilizing asset prices and the clear signal that interest rates have peaked encourage investors to support renewed capital deployment,” said Craig Shute, CEO, Asia-Pacific, Knight Frank.

“As investors gravitate toward office, industrial, and retail assets that offer resilient income and long-term growth potential, improved financing conditions and clearer valuation floors are helping to restore confidence across key markets,” Shute added.

Tariff uncertainty

With $5.6 billion in deals already captured in the first weeks of Q2 2025, the market shows promising signs of continued growth. Central bank rate cuts have enhanced the attractiveness of debt-financed acquisitions, while stabilizing asset prices have fueled increased market activity.

Christine Li, head of research, Asia-Pacific, Knight Frank said:”While we anticipate this positive momentum to gather pace, the on-again, off-again tariffs are muddying the outlook for further recovery in the investment landscape.”

“Should tariffs lead to a sustained increase in inflation, the Fed would likely raise interest rates, exerting upward pressure on long-term interest rates and cap rates, potentially dampening capital markets activity globally. If implemented in full force, the industrial and retail sectors will likely bear the brunt, with decreasing consumer spending and shifting goods movement directly influencing demand,” Li explained.

Despite the broader economic uncertainties, the office sector across Asia-Pacific demonstrates notable stability, protected by a unique combination of structural advantages and positive market cycles.

This is particularly evident in Japan and Australia’s premier cities, where high occupancy rates persist alongside steady rental growth trajectories even as other sectors face potential headwinds.