APAC Real Estate Investment Volume Up 20% in Q1 as Cross-Border Deals Soar: JLL

Commercial real estate investment in Asia Pacific jumped 20 percent year-on-year in the first three months of 2025 to $36.3 billion, marking the highest first-quarter volume since the 2022 rate-hike cycle began, according to JLL.

The total got a boost from $8.6 billion in cross-border volume, the most in a first quarter since 2019, the consultancy said in its Capital Tracker update. Overseas investors piled into office, logistics and living assets as cross-border trade surged 152 percent year-on-year.

Positive yield spreads helped Japan keep its crown as APAC’s top market for inbound investment, as the Land of the Rising Sun chalked up $13.7 billion in total trade volume — up 20 percent year-on-year and the country’s highest first-quarter level in five years. On the other end, China recorded the only year-on-year drop among the region’s key markets as volume slid 33 percent to $3.8 billion, with domestic insurers stepping up as a major capital source.

“While short-term tariff-induced market volatility might give investors cause for temporary pause on large deal activity, property investors with a long-term horizon, looking for stable income streams and higher yields will continue to allocate into this resilient asset class as it remains relatively insulated from short-term fluctuations,” said Stuart Crow, JLL’s CEO of APAC capital markets. “We continue to be of the opinion that the Asia Pacific region will be a net beneficiary of cross-border capital flows.”

Japan Dynamic

US private equity titan Blackstone scored APAC’s highest-value deal of the first quarter as it closed on its acquisition of the Tokyo Garden Terrace Kioicho commercial complex for $2.6 billion, marking the largest-ever real estate purchase by a foreign investor in Japan. The mixed-use property comprises two high-rise office towers, 135 residential units and a 250-key hotel, plus conference and wedding venues, restaurants and retail shops.

With commercial activity continuing to boost rents, the office sector dominated Japanese asset trades in the first quarter, as Tokyo saw several big-ticket deals led by Nippon Life’s $287 million acquisition of Otemachi One Tower from Mitsui Fudosan. The property investment division of Mitsui Corporation also sold the Yokohama Mitsui Building to Nippon Building Fund, a REIT managed by Mitsui Fudosan, for $283 million, according to JLL.

Japan witnessed APAC’s top hospitality deal of the quarter, as SC Capital Partners’ Japan Hotel REIT completed its long-incubating purchase of the Hilton Fukuoka Sea Hawk for $422 million, as well as the region’s biggest retail transaction, with Hong Kong’s Gaw Capital Partners and Singapore’s Patience Capital Group picking up the Tokyu Plaza Ginza mall for $984 million.

Portfolio deals drove volume elsewhere in the region: fund manager Bain Capital bought four purpose-built worker dormitory compounds in Singapore from Blackstone for $555 million, while Swiss private equity firm Partners Group acquired Australian data centre platform GreenSquare DC for $758 million.

Tariff Impact Seen

JLL said the US tariffs would likely hit export-reliant markets like Vietnam, Malaysia and South Korea the hardest. With the expected lower growth and recession fears, leasing and investment across all commercial real estate sectors could be affected, according to the consultancy.

The logistics segment is especially vulnerable to potential trade reductions and diversions in distribution routes. JLL warned that warehouses near Nagoya Port — the largest in terms of cargo volume in Japan, which exports roughly 35 percent of its auto parts to the US — could see adverse impacts in value and tradability.

“Asian markets reliant on US exports may face depreciation pressures ahead, due to the weakening of the US dollar brought about by pessimistic US growth outlook,” said Pamela Ambler, head of investor intelligence for Asia Pacific at JLL. “This could have a knock-on effect and make real estate cheaper for regional and global investors investing with US dollars.”