According to the latest capital tracking data from Jones Lang LaSalle, commercial real estate investment in the Asia-Pacific region reached $47 billion in the first quarter of 2026, marking a 31% year-on-year increase and the strongest first-quarter performance on record.
Japan led the region with $13.2 billion in investment volume, despite a 4% decline from the previous year, with office assets remaining popular among investors. Singapore followed closely, with investment soaring 433% year-on-year to $11.5 billion. Australia saw a 49% increase to $5.7 billion, driven primarily by several large-scale portfolio transactions in the retail sector. South Korea's investment volume was $4.8 billion, down 29% year-on-year, though the hotel sector demonstrated strong transaction momentum.
In mainland China's major markets, the total volume of large-scale transactions was $3.6 billion in Q1 2026, showing a slight recovery from the previous quarter, with deals primarily driven by domestic capital. The Hong Kong market continued to show signs of recovery, with investment growing 41% year-on-year to $1.6 billion, reflecting increased liquidity in the office and retail sectors.
Cross-border investment in the Asia-Pacific region hit a record quarterly high of $16.3 billion, an 87% year-on-year increase. The region continued to perform strongly in large-scale cross-border investments, with major Q1 transaction activity led by office properties. Concurrently, amid the wave of AI-driven economic transformation, "HALO assets"—characterized by heavy asset attributes and low obsolescence risk—are proving highly attractive to investors seeking stability. For instance, data center assets in the Asia-Pacific region attracted $4.1 billion in investment during the quarter.
Private capital has shown a marked increase in acceptance of higher-risk, higher-return investment strategies. Total private capital investment in the Asia-Pacific region reached $6.2 billion in Q1, up 2% year-on-year and 4% above the five-year quarterly average. Leveraging flexible strategies, private capital is actively engaging in value-add and opportunistic investments. In mainland China's major markets, the share of private capital in total transaction volume has risen from 3% in 2021 to 27%, indicating a significantly stronger willingness to proactively capture investment windows during the market adjustment cycle.
A senior executive from JLL's International Capital North Asia division noted that the Asia-Pacific commercial real estate investment market demonstrated robust resilience in Q1 2026, reflecting global capital's confidence in allocating to the region. Notably, in the context of AI-driven economic development, "HALO assets" with heavy asset and low obsolescence characteristics are rapidly becoming a core choice for capital allocation. Commercial real estate, with its advantages of being capital-intensive, having long lifecycles, and providing stable cash flow, is gaining strategic favor from investors.
The mainland Chinese market is accumulating stabilizing momentum amid differentiation, with structural opportunities accelerating their formation. In Q1 2026, total transaction volume in mainland China's major markets recovered somewhat from the previous quarter, showing marginal improvement in investment sentiment, with domestic institutions and owner-occupier buyers continuing to dominate the market.
In the office sector, investment activity in first-tier cities increased, with several landmark transactions in core locations completed during the quarter. In Shanghai, for example, landmark office assets attracted significant capital, with core-area office properties remaining the preferred investment choice for buyers. Office property transactions amounted to 9.7 billion yuan, accounting for 66% of total transaction value and 54% of the number of deals. Sustained acquisition demand from state-owned enterprises, insurance capital, and private enterprises has driven increased activity in first-tier city office transactions.
Investment sentiment towards hotel assets showed signs of recovery, with renewed investor demand for hotels in core locations and tourism-driven destinations that generate stable cash flow. Transactions such as the sale of the Tianjin Pan Pacific Hotel to a high-net-worth individual and the acquisition of the Guilin Sheraton Hotel by a local private enterprise reflect a return of domestic capital confidence in stable cash-flow assets benefiting from tourism recovery.
Meanwhile, the underlying asset scope of the public REITs pilot program was formally expanded at the end of 2025 to include commercial real estate categories such as offices and hotels. This provides a path for securitizing existing assets and guides capital more normatively towards core assets with stable operations, signaling an accelerated market shift towards a cash-flow-oriented investment logic.
The Hong Kong market also showed highlights. The first quarter recorded several office and retail property transactions led by educational institutions. With Hong Kong's continued push to establish itself as a regional education hub, educational institutions are expected to remain a significant force in the commercial real estate investment market.
A senior executive from JLL China's Investment and Capital Markets division stated that the large-scale transaction markets for commercial real estate in mainland China and Hong Kong remain in a phase of structural adjustment. However, with marginal improvement in investment sentiment and active transactions in retail, hotels, and Shanghai-area offices, the market is accumulating stabilizing momentum. Following a prolonged adjustment period, investor focus on assets in core locations has notably rebounded, with greater emphasis placed on cash flow stability and long-term operational resilience. In the future, core-location assets capable of generating stable, cross-cycle cash flows are expected to remain a focal point for capital allocation.
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