Strong pickup in retail and office activity propels Hong Kong’s recovery, contributing to a record-breaking USD92.5 billion first half for the wider Asia Pacific market
Commercial real estate (CRE) investment in Hong Kong experienced a sharp rebound in the second quarter of 2026, with transaction volumes surging 129% year-on-year (YoY) to USD3.1 billion. According to JLL, this robust recovery was primarily driven by a strong pickup in retail and office activity. For the first half of 2026, Hong Kong volumes reached USD4.7 billion, representing a 90% increase YoY.
Coming off its low base to see the market post triple-digit YoY volume growth in the second quarter, Hong Kong’s robust performance comes as investors selectively target assets offering immediate yield stabilisation. Office deals in the city were notably driven by assets under receivership, including 299 Queen’s Road Central and One Bedford Place. Positive office leasing momentum is expected to revitalise the market, while retail price corrections have largely paused, keeping closed deal volumes stable.
Oscar Chan, Head of Hong Kong Capital Markets at JLL, said:
“Hong Kong’s CRE investment market remains highly active. Despite ongoing macroeconomic uncertainties and a complex interest rate environment, we are seeing continuous investment activity flowing into the city. The market has recorded several notable transactions involving retail podium assets and luxury residential projects, which reflect sustained buying interest and underlying investor confidence in selected asset classes.”
This strong local performance contributed to a broader regional resurgence, as CRE investment in Asia Pacific climbed 38% YoY to USD45.5 billion in the second quarter of 2026. For the first half of 2026, volumes totalled USD92.5 billion, representing a 35% YoY increase. This marks the strongest first-half volume on record despite rising energy inflation, currency volatility, and supply chain disruptions. Strong semiconductor and automotive demand propped up industrial manufacturing, while robust global AI capex supported the region’s tech-driven export growth.
Japan posted USD10.6 billion in the second quarter, up 39% YoY, bringing its first-half total to USD23.8 billion, which reflects a 12% YoY increase. Volumes grew across all sectors, with office leading activity as core capital acquired assets. Value-add investors seeking below-market rents drove the industrial sector, while data centres experienced unprecedented demand due to the government’s push for local data sovereignty and Gen AI.
Australia registered USD8.9 billion in the second quarter, rising 82% YoY. This pushed its first-half total to USD14.7 billion, representing a 68% increase. This was the highest second-quarter volume since 2021, driven by four large-scale portfolio transactions. A-REITs, unlisted property trusts, developers and private investors were highly active in the industrial sector. Retail continues to draw capital as REITs re-engage with the sector and private investors acquired assets below AUD50million.
Singapore traded USD6.7 billion in the second quarter, surging 108% YoY. This brought its first-half total to USD18.2 billion, a 238% increase. Two large deals anchored the quarter: CICT acquired Paragon mall from Cuscaden Peak for USD3 billion, while IOI Properties acquired Asia Square Tower 2 from CICT for USD1.9 billion.
“While investors are navigating an unpredictable geopolitical backdrop and the reversing of the regional rate-cutting cycle due to stubborn inflation, the sheer scale of transactions this quarter shows that capital remains abundant,”
Said Stuart Crow, CEO, Asia Pacific Capital Markets at JLL.
“Rental growth prospects across nearly all major markets and sectors are very compelling, driven by a lack of supply and rising replacement costs. The return of mega-deals, in both office and retail, demonstrates that large global investors are capitalising on repriced premier core assets.”
Regionally, investment flows showed a clear structural shift toward technology-supporting assets and value-add real estate. Across major markets like Japan and Australia, sectors were heavily propelled by strong data centre demand and logistics portfolio acquisitions. Simultaneously, investors selectively targeted office and hotel assets offering immediate yield stabilisation or pricing adjustments, even as elevated interest rates widened the buyer-seller gap in markets like South Korea.
“The persistent uncertainty has forced investors to underwrite deals with greater caution, yet the appetite for APAC real estate remains remarkably intact,”
Said Pamela Ambler, Head of Investor Intelligence, Asia Pacific at JLL.
“Investors are pivoting toward sectors with strong structural demand, such as data centres in Japan and logistics in Australia, or targeting assets that offer immediate yield stabilisation, like Hong Kong’s recovering offices.”
