This is the second-highest volume on record.
Asia-Pacific commercial real estate investment reached US$65.6 billion in the third quarter of 2026, up 17.9% quarter-on-quarter and 7.3% year-on-year, marking the second-strongest quarter on record, according to Knight Frank.
The property consultancy reported that year-to-date investment rose 29.3% year-on-year to US$183.4 billion, equivalent to 93.9% of full-year 2025 volumes. However, rising borrowing costs are beginning to weigh on market liquidity, pricing and returns, prompting investors to become more selective.
Retail was the strongest-performing major sector, with investment climbing 54.3% year-on-year to US$12.5 billion, representing 19.1% of regional transaction volumes.
Singapore led activity, with CapitaLand Integrated Commercial Trust’s US$3 billion acquisition of Paragon on Orchard Road accounting for almost a quarter of regional retail investment.
Australia also recorded several major retail transactions, including Cbus Property’s US$914.2 million acquisition of 50% stakes in Westfield Carindale and Lakeside Joondalup, GPT Wholesale Shopping Centre Fund’s US$836.9 million purchase of 50% interests in Sunshine Plaza and Macarthur Square, and Australian Retirement Trust’s US$620.6 million acquisition of a 50% stake in Westfield Mt Gravatt.
Knight Frank said these deals reflected a combination of seller-side fund liquidity and recapitalisation requirements, alongside buyers’ strategies to secure long-term income-producing assets.
Daniel Dixon, head of capital markets, Asia-Pacific at Knight Frank, said investment activity began the year with strong conviction, as investors returned to the market and deployed capital at a pace not seen for some time.
However, he noted that higher debt costs were now putting pressure on liquidity, pricing and returns, leading to a more cautious approach.
Dixon expects some transactions to be delayed or repriced as buyers and sellers adjust their expectations. He added that well-capitalised investors with longer-term investment horizons should be best placed to identify opportunities among motivated sellers.
Cross-border investment strengthens
Cross-border investment surged 88.3% quarter-on-quarter to US$23.8 billion in Q3, accounting for 36.3% of regional investment volumes. This was its highest share since the fourth quarter of 2024, with capital concentrated in established gateway markets.
Japan remained Asia-Pacific’s leading destination for cross-border investment for the fourth consecutive quarter, attracting US$6.4 billion, up 66.3% year-on-year. Multifamily investment reached US$1.6 billion, supported by resilient rental demand and favourable yield spreads.
Singapore ranked second with US$3.4 billion, an increase of 75.9% year-on-year, as transactions including Paragon and Wheelock Place highlighted continued demand for scarce prime retail and commercial assets.
Australia attracted US$3 billion in cross-border capital, up 20.8% year-on-year. Almost US$1.5 billion was directed towards office assets, with rental growth in Sydney and Brisbane supporting investor interest despite higher financing costs.
Christine Li, head of research, Asia-Pacific at Knight Frank, said cross-border investment during the first nine months of 2026 had already exceeded the full-year 2025 total.
If the current pace continues, she said, 2026 could surpass the previous annual peak and exceed US$90 billion for the first time.
Li also highlighted the continued importance of offices, which remain the region’s largest investment sector, accounting for more than a quarter of investment demand. In gateway markets such as Singapore and Tokyo, investors are targeting high-quality buildings where tenant demand and limited competing supply support future rental income.
Well-capitalised investors positioned for opportunities
Despite increasing financing pressures, Knight Frank expects Asia-Pacific commercial property investment volumes to grow by 15% to 20% year-on-year in 2026.
The consultancy said the next phase of the market would favour investors with sufficient capital and the conviction to take a longer-term view.
As valuations adjust, well-capitalised buyers should be better positioned to capitalise on opportunities, particularly in assets where rental growth can underpin returns throughout the investment cycle.