APAC Real Estate Investment Rose 25% in Q3, Led by Australia, Korea

Trades of income-earning properties in Asia Pacific grew to $50.4 billion in the third quarter, a 25 percent increase from a year earlier, helped by easing trade tensions and falling financing costs, according to MSCI Real Assets.

China, Australia, Japan, South Korea, and Hong Kong ranked as APAC’s five most active markets in the July to September period, per the data provider’s latest Asia Pacific Capital Trends report.

Australia led the regional recovery, with deal volume surging 72 percent year-on-year to $8.8 billion. The return of cross-border capital to Australia’s living and data centre sectors drove the rally as net capital inflows by overseas investors reached $5 billion in the first nine months of 2025.

Korea also had a strong third quarter, posting $7.6 billion in investment, its highest since the second quarter of 2022, with offices remaining a key focus at the same time that the hotel sector began heating up.

“While there are still concerns about the pace of global growth and the eventual impact of the tariffs on individual markets, the outlook is a lot more positive today compared with earlier in the year,” said Benjamin Chow, head of private assets research for Asia at MSCI. “Returns are back into positive territory and activity has recovered across most major markets, with the deal pipeline heading into the fourth quarter at a healthy level. On the whole, 2025 looks more likely to end on a positive note than not.”

Rebound in Hong Kong

While starting from a lower base, Hong Kong stood out with a stellar 231 percent year-on-year jump in deal volume to $4.9 billion, edging out India to secure its spot in the top five. Major office and data center deals, with cross-border capital playing a pivotal role, helped fuel Hong Kong’s highest quarterly volume since 2019, said MSCI.

The city’s largest deal in the quarter was Goodman Group’s sale of stake in a portfolio of six data centres with 325-megawatt of total IT capacity to a private investment vehicle backed by investors including Dutch pension fund managers PGGM and APG for $2.16 billion.

China rebounded from fourth place in the previous quarter to reclaim the region’s top spot with $9.5 billion in deals, with almost half of that volume coming from two major deals – ESR’s $7 billion privatisation at half its peak market valuation in 2021 and a sale of portfolio of former Guangzhou R&F hotels by receivers who had seized the assets from the defaulting developer. 

Amid lingering tariff uncertainty, distressed sales accounted for over a third of China deal activity in the third quarter, according to MSCI.

Deal volume in Japan declined 7 percent to $8.6 billion in the third quarter after multiple quarters of growth. Offices and data centers led a 7 percent expansion in deal volume in Asia’s second largest economy over the first three quarters of this year, with Tokyo remaining the region’s top metro for deal volume.

Cross-Border Deals Revive

Acquisitions by overseas investors grew for a fifth consecutive quarter in the July-September period, fueling the recovery in APAC commercial real estate markets. Cross-border deals accounted for 36 percent of total investment in the 12 months ending 30 September, matching the previous peak in the 2019 calendar year, according to MSCI.

Data centers remained the top target for cross-border capital in the first three quarters of 2025, boosted by deals like DigitalBridge and La Caisse’s acquisition of Yondr Group, which had several properties in the region, as well as portfolio transactions in China and Hong Kong. 

Japan offices ranked the second most popular target sector, led by KKR’s $2.0 billion acquisition of a stake in Tokyo’s Shiodome City Center. 

Australia’s living sector ranked third among cross-border investor favourites, with Korea’s NPS teaming with Scape to acquire Aveo’s senior housing portfolio for $2.5 billion alongside a number of smaller commitments to student and senior housing deals earlier in the year by international players.

Japan’s multifamily sector also remains a top target for overseas investors, with Patrizia and Alyssa Partners acquiring separate portfolios of multifamily assets on behalf of GIC.