Asia Pacific Real Estate Marks Strongest Recovery Since 2021: JLL Capital Tracker Insights
The Asia Pacific (APAC) commercial real estate market has officially turned the corner. According to the latest JLL Asia Pacific Capital Tracker, investment volumes reached a staggering US$147.6 billion in 2025, marking a 12% year-on-year increase and the region’s strongest performance since 2021.
As we look toward 2026, the narrative has shifted from “cautious waiting” to “strategic deployment.” Here are the key takeaways for investors and property professionals in the region.
1. The Powerhouse Markets: Japan, South Korea, and India
While the global economy faced headwinds, several APAC markets demonstrated remarkable resilience.
- Japan: Remained the region’s heavyweight, recording US$41.4 billion in annual investment. Low interest rates continue to make Tokyo and Osaka prime targets for cross-border capital.
- South Korea: Saw a 29% surge in investment, driven by fierce domestic competition for core office assets and a growing foreign appetite for logistics.
- India: The standout performer of the year, India’s investment value skyrocketed by 183% year-on-year, hitting US$7.1 billion. This growth is underpinned by massive demand for institutional-grade office spaces and industrial assets.
2. The “AI Effect” on Property Portfolios
One of the most significant shifts identified in the tracker is the direct impact of Artificial Intelligence on real estate. AI spending is fueling a robust pipeline for Data Centers, with investment volumes in this sector reaching US$15 billion in 2025 alone. As digitalization accelerates in Southeast Asia and India, data centers are transitioning from a niche alternative to a core institutional asset class.
3. Sector Highlights: Office Rebounds and Living Gains
Despite global narratives of office decline, the APAC office sector accounted for 45% of total direct investment.
- Office: Investors are favoring “flight-to-quality” assets. Singapore and Seoul lead the way with low vacancy rates and stable rental growth.
- The Living Sector: Multifamily, student housing, and co-living are capturing a record share of investment (9% in 2025). Japan and Australia remain the primary hubs for this sector, offering stable, long-term cash flows.
- Retail: Singapore and Australia’s prime retail markets have seen a resurgence, driven by tourism recovery and limited new supply.
4. Looking Ahead: What to Expect in 2026
The recovery is being supported by a new “rate-cutting cycle” as central banks begin to ease monetary policies. JLL experts suggest that 2026 will be a “banner year” for early movers.
Strategic Tips for Investors:
- Watch the Yield Spreads: With debt costs bottoming out, positive yield spreads are returning to markets like Singapore and Australia.
- Focus on Operational Assets: Mergers and acquisitions are rising as investors seek “operator-heavy” sectors (like hospitality and living) to gain scale quickly.
- Sustainability is Non-Negotiable: Green-certified buildings are no longer a luxury but a requirement for attracting multinational tenants and institutional capital.
Conclusion
The Asia Pacific capital markets are enters a new phase of growth characterized by regional capital dominance and tech-driven demand. For those looking to build a resilient portfolio, the focus must remain on high-quality assets in transparent, high-growth markets.
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