Gangnam district in Seoul, South Korea. Grade A offices in core locations ranked as the most preferred investment sector, based on CBRE’s latest Asia Pacific Cap Rate Survey. (Photo: Shutterstock)
Asia Pacific (Apac) real estate investment activity grew in the first quarter of 2026, supported by increased capital deployment. This came despite geopolitical and macroeconomic uncertainties stemming from the ongoing Middle East conflict, note market watchers.
In 1Q2026, total investment volumes in Apac climbed to US$64.6 billion ($82.3 billion) — the strongest quarterly performance since 4Q2021, according to Knight Frank in its Asia Pacific Capital Markets Insights report published on April 30. This represents a growth of 13% q-o-q and 64.7% y-o-y.
Although the first quarter of the year is typically a seasonally softer period, the 1Q2026 figure rebounded from the previous quarter, which saw investment volume slide 10% q-o-q.
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Knight Frank believes the stronger performance indicates a clear shift in investor behaviour, with capital moving from price discovery to deployment. “We are seeing institutional investors re-engage with greater conviction, particularly for prime assets and larger-scale opportunities that offer liquidity, income resilience and clearer execution pathways,” says Daniel Dixon, head of capital markets, Apac, at Knight Frank.
Separately, data tabulated by CBRE shows that commercial real estate investment volume across Apac rose 18% y-o-y to US$46.2 billion in 1Q2026, with investment activity led by Singapore, India and Hong Kong.
Chart: MSCI Real Assets, Knight Frank Research (data downloaded as of April 14)
Sentiment weakens amid uncertainty
Notwithstanding the improved performance, the firm notes that investment sentiment has softened following the Middle East conflict.
CBRE’s Asia Pacific Cap Rate Survey, published on April 30, shows that risk appetite among investors has declined compared to six months ago, with geopolitical concerns topping the list of challenges investors flagged for the next six months.
However, the firm notes that sentiment is “not as negative” as in 2023, when the region had exited the pandemic. In addition, sentiment remains buoyant in certain markets, supported by strong occupier fundamentals and steady leasing demand.
The survey, which tracks Apac pricing trends and market sentiment, polls CBRE’s capital markets brokers and valuers across the region every six months.
Read also: Singapore real estate investments up 10% q-o-q in unusually robust 1Q2026: Knight Frank
The latest survey was conducted between March 16 and 31, after the onset of the Middle East conflict, but before the two-week ceasefire announced on April 8. On April 21, US President Donald Trump announced an indefinite extension of the ceasefire to facilitate peace talks.
Chart: CBRE Research, March 2026
Grade A offices take the lead
Offices drove the bulk of real estate investments in 1Q2026, according to Knight Frank. The office sector accounted for the largest share of activity during the quarter, surging 46.7% y-o-y to US$23.5 billion.
Investors continued to focus on high-quality assets in core locations, supported by improving leasing fundamentals, occupiers’ ongoing flight to quality, as well as structurally constrained development pipelines, the firm adds.
Likewise, CBRE notes that Grade A offices in core locations ranked as the most preferred investment sector, with 59% of its survey respondents indicating they received the most interest from their clients for such assets. This represents a jump from 38% in the last survey, conducted in 3Q2025.
Notable office deals during the quarter included Mirae Asset’s US$1.05 billion acquisition of G1 Seoul Buildings A and B in South Korea, as well as Allgreen Properties’ purchase of 78 Shenton Way in Singapore for around $600 million to $630 million.
Investors double down on cross-border deals
Renewed capital deployment also bolstered cross-border investments, which reached US$22.4 billion in 1Q2026, spiking 56.3% q-o-q and more than doubling y-o-y, Knight Frank’s report states. Cross-border deals made up 34.8% of Apac’s total investment volume in 1Q2026.
Read also: Clearer markets, brighter sentiment to boost Apac real estate investment momentum in 2026: Colliers
Japan led the charge, recording US$6 billion in inbound investment during the quarter, up 2.5% y-o-y. This was driven by its office sector, which drew institutional investor interest due to its consistently low prime vacancy and strong occupier demand. Notable deals in 1Q2026 included Brookfield Asset Management’s acquisition of Dentsu HQ Building from Japanese developer Hulic for nearly US$2 billion.
Knight Frank adds that a limited supply of prime assets also drove entity-level transactions in Japan, such as the acquisition of Tokyo-listed commercial Reit, Sankei Real Estate, by Singapore sovereign wealth fund GIC and Japan’s Tosei Asset Advisors for US$372.6 million. Sankei Real Estate owns a portfolio of nine office buildings, six hotels and a logistics asset.
Singapore logged the second-highest cross-border deal values in the region last quarter. Cross-border investments in the city-state surged by nearly fivefold y-o-y, going from under US$1 billion in 1Q2025, to a whopping US$5.7 billion in 1Q2026. The spike was largely driven by Hongkong Land’s spin-off of multiple office assets and a retail mall into the Singapore Central Private Real Estate Fund, which is co-anchored by the Qatar Investment Authority and Dutch pension manager APG Group.
Meanwhile, South Korea came in third, recording cross-border investment values totalling US$1.4 billion during the quarter. The logistics sector accounted for 38.8% of deal values, as lower new supply and steady leasing demand for prime industrial assets fuelled investment activity. Deals logged during 1Q2026 included the acquisition of Shinsegae Food Hub for US$201 million by global investment firm KKR.
Chart: MSCI Real Assets, Knight Frank Research (data downloaded as of April 14)
Capital deployment to become more selective
Moving into 2Q2026, Knight Frank observes that a prolonged Middle East conflict could potentially reignite inflationary pressures, leading to a tightening of interest rates that could weigh down on financing conditions while widening the price gap between buyers and sellers.
As a result, while capital deployment is likely to remain active, the firm predicts it may become increasingly selective, with investors focusing on core and well-located assets in safe-haven markets.
For CBRE, the ongoing conflict could keep construction costs elevated, limiting new development starts and tightening future supply across the region. “This dynamic is likely to create a supply-demand imbalance, offering attractive opportunities for investors for the medium term,” says Ada Choi, head of research, Apac, at CBRE.
CBRE also notes that elevated geopolitical and macroeconomic risks are driving divergent sentiment across the region. Its survey asked respondents about how the Middle East conflict could affect investment sentiment in their respective markets. Australian respondents were expecting sentiment to be hit the hardest as rising oil prices add pressure to inflation and interest rate expectations.
On the other hand, Hong Kong and Singapore saw a higher proportion of respondents predicting the conflict to have a positive impact on the markets, potentially due to the cities’ status as safe havens for capital.
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