APAC and EMEA repricing creates opportunity window for well-located assets
Key Takeaways
- Quality commercial real estate in Asia Pacific and European markets now trades below replacement costs, creating compelling entry points for private wealth investors not seen since the financial crisis
- Private capital investment surged in key markets including UK (+66%), Hong Kong (+40%), Singapore (+93%), South Korea (+237%) and India (+1,378%), with private wealth outcompeting institutional capital on execution speed and certainty
- Rising construction and labour costs are being closely monitored by investors, in addition to the rate environment, as limited new supply creates rental growth for existing well-located assets
Commercial real estate has undergone significant repricing across Asia Pacific and European markets, creating a compelling opportunity for private wealth investors. Quality buildings in core markets are now trading below replacement costs – a dynamic not seen since the financial crisis – while institutional capital largely remains on the sidelines.
In Asia Pacific, the replacement cost argument follows different mechanics but reaches similar conclusions. Rising construction and labour costs have pushed delivery costs for new prime office towers well above current acquisition pricing for quality existing buildings in markets like Sydney, while Tokyo presents selective opportunities in older buildings requiring repositioning.
“Rising construction and labour costs are being closely monitored by investors, in addition to the rate environment”noted Tim Graham, Global Lead, International and Strategic Capital, Head of Private Wealth in APAC at JLL. “That’s a bullish signal for existing well-located assets, because constrained supply creates rental growth potential in markets where occupier demand is healthy.”
“The construction cost dynamic is now explicitly part of buying decisions in Asia-Pacific in a way it wasn’t eighteen months ago,” added Daniel Billig, Senior Director, Capital Markets Transactions at JLL. “When investors compare the economic costs of development against the option of acquiring income producing assets with minimal capex, the acquisition case becomes much easier to make.”
Private capital has been the largest source of funding for commercial real estate globally for four consecutive years. In Asia Pacific, despite overall investment activity declining, private capital investment increased sharply in Hong Kong (+40%), Singapore (+93%), South Korea (+237%) and India (+1,378%), with Japan remaining a major focus across multiple asset classes.
By comparison, European markets moved first, with the UK, France and Germany now offering quality assets at substantial discounts to previous peaks and below current construction costs. The UK alone attracted more than €10.1 billion in private investment last year, up 66% from 2024. London secured €5.2 billion of that total, more than doubling its volume from the previous year.
“If you’re looking at an asset that is currently trading at a discount of around 20-30% compared to previous peaks, then on a long-term basis that represents good value, and when combined with future rental growth and solid fundamentals, then that’s a pretty mitigated risk,” explained Joseph von Maltzahn, Head of Private Wealth for EMEA at JLL. “When you couple that with the question ‘what would it cost to replace this building today?’ and the answer is more than you’re paying, your downside is well protected.”
FAQs
Question: Why are private wealth investors outcompeting institutional capital in current market conditions?
Answer: Private wealth investors are winning deals based on execution certainty and speed rather than higher bids alone. Their decision-making processes are clearer and faster, with less execution risk compared to institutional investors who face longer approval cycles and quarterly performance pressures.
Question: What makes the current pricing opportunity significant compared to recent market cycles?
Answer: Quality assets in core European and Asia Pacific markets are trading below previous peaks and often below replacement costs -a dynamic not seen since the financial crisis. As construction costs to develop buildings edge higher in an inflationary environment, existing income producing assets acquired below replacement cost, offer substantial downside protection.
Question: What investment strategies are private wealth investors pursuing?
Answer: Private wealth capital follows two distinct approaches: acquiring trophy assets in gateway cities for generational wealth and long-term family ownership, or operating tactically to identify mispriced assets for repositioning with three-to-seven-year exit.
Question: How are rising construction costs affecting investment decisions in Asia Pacific?
Answer: Rising construction and labour costs are being closely monitored by investors, in addition to the rate environment, as limited new supply creates rental growth for existing well-located assets.
Question: Which markets are seeing the strongest private wealth investment activity?
Answer: The UK attracted over €10.1 billion in private investment in 2025, up 66% year-over-year, with London capturing €5.2 billion. In Asia-Pacific, private capital investment surged in Hong Kong (+40%), Singapore (+93%), South Korea (+237%) and India (+1,378%), while Japan remains a consistent focus across multiple asset classes.