Asia Pacific’s commercial real estate sector experienced a significant upswing in the first quarter of 2026, with investment volumes rising 22% year-over-year to US$51.1b, according to MSCI’s latest report. The recovery, which began in mid-2025, has continued into 2026, with Singapore emerging as a standout performer, achieving a fivefold increase in deal volume to a record US$7.9b.
The growth was widespread across most markets, with China and Hong Kong showing signs of recovery from prolonged declines. In contrast, Australia and Japan faced modest contractions due to rising interest rates. Benjamin Chow, Head of Private Assets Research for Asia at MSCI, noted, “Asia Pacific’s commercial real estate markets have entered 2026 on a strong footing, with Singapore the clearest illustration of how falling interest rates have contributed to improved market liquidity.”
Singapore posted a record-high quarter with US$7.9b in deal volume, unseating Tokyo as Asia Pacific’s most active metro for the first time since 2021. Deal volume for its office, retail and industrial sectors each ranked top across the region in Q1 2026. Buildings such as 78 Shenton Way and i12 Katong, which had been on the market for a long time, finally found buyers, while the materially lower cost of financing was evident in Link REIT’s pending sale of Thomson Plaza, priced at a tight 3.7% cap rate, 180 basis points lower than at its acquisition three years ago.
The office sector led the charge with US$21.0b in transactions, a 25% increase from the previous year. Industrial and retail sectors also saw substantial gains, with industrial transactions rising 33% to US$10.3b and retail volumes climbing 31% to US$9.7b. Data centre investments more than doubled to US$4.0b, reflecting sustained interest in this asset class.
Cross-border investment reached US$18.2b, a 64% increase, with EMEA investors deploying a record US$5.3b into the region. Despite geopolitical uncertainties, such as the recent Iran conflict, the structural drivers of recovery remain intact, with capital values improving and global investors seeking diversification. The outlook for Q2 remains cautiously optimistic, although potential interest rate hikes could pose challenges.
