Commercial real estate yields stabilise as APAC investment rebounds

Alibaba and Ant Group deal named the largest office deal in the region since 2021.

Hong Kong’s commercial real estate yields stabilised in late 2025, ending a downturn that began in mid-2019, according to MSCI data.

The office market saw a boost in corporate acquisitions, with Alibaba and Ant Group purchasing half of One Causeway Bay for $7.22b (US$925m)—the largest Hong Kong office deal since 2021.

Total Asia Pacific investment reached $1.43t (US$182.9b) in 2025, matching 2024 levels, whilst individual property sales hit $312b (US$40b) in the fourth quarter (Q4)—the highest since 2022. Changes in financing costs helped end the cap-rate expansion cycle across most sectors.

Office transaction volumes fell 2% year on year in Q4 but rose 11% for the full year, led by activity in Australia, South Korea, Hong Kong, and Singapore.

Retail investment jumped 29% in Q4 to $79.56b (US$10.2b), driven by Australia and Singapore, marking their highest retail totals in three years.

Industrial investment reached $87.36b (US$11.2b) in Q4, a 2% increase, as cross-border buyers focused on South Korean logistics assets, including KKR’s $5.46b (US$700m) acquisition of Cheongna Logistics Center.

Data centre investment fell 87% in Q4 to $18.72b (US$2.4b), though the full-year total of $109.98b (US$14.1b) was the second-highest on record, with single-asset deals representing more than half of the annual volume.

South Korea recorded $65.52b (US$8.4b) in Q4 investment, led by Seoul offices, driving a 17% annual increase. Singapore reached $35.1b (US$4.5b) in 2025, the third-highest total on record, with domestic buyers accounting for $28.08b (US$3.6b).

Australia saw a 15% increase, including the $20.28b (US$2.6b) acquisition of the Aveo seniors-housing platform.

China fell to fourth in Q4 activity as domestic institutions reduced acquisitions in the second half of the year, with retail emerging as the most traded property type. Japan recorded a slowdown in Q4 amidst rising interest rates, although rental growth continued in office, multifamily, and hotel segments.

The report noted falling interest rates across Asian markets. The return of core investors and a focus on value-add office opportunities are expected to support market liquidity in 2026.

(US$1 = HK$7.82)