Real Estate Sector Quarterly Insights - APAC Q2 2026

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Prime markets hold firm as office demand concentrates – Asia Pacific 

The winner-takes-more dynamic is intensifying, with institutional capital concentrating in prime assets and secondary stock falling further behind.

Despite evolving workplace strategies and the growing adoption of AI, investor demand for prime CBD office assets remains robust. Transaction volumes reached US$17 billion in the latest quarter, the strongest result since 2018,  driven by landmark deals in Singapore and Tokyo. The market continues to polarise, with well-located premium assets backed by strong tenant covenants attracting genuine pricing tension and competitive bidding. In contrast, secondary and fringe office stock faces ongoing leasing challenges, weaker occupier demand, and increasing pressure on capital values.

Below are some of the biggest deals that are leading the office market through 2026:

Australia: Prime assets continue to attract capital

• Sydney remains the deepest pool of liquidity, highlighted by Blackstone's proposed sale of 85 Castlereagh Street (~$900 million), Aware Super's pursuit of 100 Market Street (>$500 million), and Charter Hall's acquisition of a stake in the O'Connell Street precinct development site (> $500 million).
• North Sydney has emerged as a major institutional investment market. Dexus' sale of 100 Mount Street to Investa and BGO for approximately $600 million and Mapletree's marketing campaign for its North Sydney tower demonstrate sustained investor confidence in the precinct despite broader office market challenges.
• Brisbane is one of the strongest-performing office markets in the region. Dexus' 480 Queen Street is expected to transact near its $680 million book value, potentially becoming Brisbane's largest office sale on record. Additional transactions including Southpoint ($255 million) and 133 Mary Street ($81.8 million) confirm growing investor appetite for Queensland office assets.
• Tenant quality remains a key differentiator. Assets underpinned by government or investment-grade occupiers, such as Castlerock's acquisition of 1 Nash Street, Perth, and Aware Super's interest in 100 Market Street, continue to attract strong investor demand.

Asia: Mega deals signal renewed institutional confidence

• The largest transaction across the region was CapitaLand Integrated Commercial Trust's sale of Asia Square Tower 2 in Singapore for approximately $2.48 billion, demonstrating continued global demand for trophy CBD office assets.
• Tokyo remains a preferred destination for global capital. Brookfield's acquisition of a 48-storey tower in Shiodome and Goldcrest's purchase of BGO's central Tokyo office asset for approximately ¥100 billion underline the city's status as one of Asia-Pacific's most liquid and resilient office markets.
• Cross-border capital is highly active. Singaporean, Malaysian, Canadian, Japanese and Australian investors are all participating in large-scale transactions, reflecting renewed confidence in core office markets after a period of repricing.
• Emerging markets continue to generate institutional interest. Jakarta's US$400 million sale of Pacific Century Place Tower demonstrates that investors remain willing to deploy capital into well-located, high-quality assets beyond traditional gateway cities.
• Alternative office strategies are gaining momentum. Vita Partners' proposed acquisition of a life sciences-focused office and laboratory asset in Macquarie Park highlights increasing investor interest in specialised workplace sectors with stronger demand fundamentals.
   

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Private capital: quiet start, private credit emerging as the key risk – Asia Pacific

The anticipated H2 recovery has yet to materialise. Rising private credit stress is the key risk for real estate capital and financing markets.

Asia's private capital market delivered a subdued first half of 2026, with fundraising activity largely concentrated among established managers. Baring Asia Private Equity Fund IX (US$15.6 billion), Blackstone Capital Partners Asia III (US$13.1 billion) and Bain Capital Asia Fund VI (US$10.5 billion) accounted for the majority of headline activity, while mid-market managers faced a materially harder environment. Despite global M&A reaching a record US$2.8 trillion in H1 2026, APAC deal value declined 2.4%, reflecting geopolitical uncertainty, private credit volatility and AI-driven valuation pressure on portfolio companies. China and Japan remain the relative bright spots, supported by AI-driven technology investment, corporate carve-outs and take-private activity.

For real estate investors, the more consequential development is emerging stress within private credit markets. Redemption requests across 20 private credit funds exceeded US$22 billion in Q2, with less than 40% fulfilled, highlighting liquidity constraints in parts of the market. As lenders increasingly rely on extensions, payment deferrals and other restructuring measures, attention is turning to covenant protection, documentation quality and enforcement outcomes across Asia's diverse legal frameworks.

With private credit now a significant source of real estate capital, investors should continue to assess refinancing exposure, lender behaviour and the robustness of legal protections within existing facilities. As conditions become more selective, financing quality may prove just as important as asset quality.

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Hotels: scarcity strengthens the investment case - Asia Pacific

Hotels remain a standout performer, with strong demand fundamentals and constrained future supply underpinning income growth.

Asset-level performance continues to strengthen across Asia Pacific, with RevPAR growth exceeding pre-pandemic benchmarks in key markets including Japan, Bali, Thailand, Vietnam and Australia. In Australia, improving fundamentals translated directly into capital markets activity, with hotel transaction volumes reaching a record ~A$2.7 billion in 2025, supported by a number of institutional-scale transactions.

Investor appetite remains concentrated in premium and luxury assets, where strong brands, pricing power and resilient cash flows are supporting earnings growth. Capital is becoming increasingly selective, with investors favouring high-quality leisure and gateway-city assets over mid-market hotels facing margin pressure from rising operating and financing costs.

The sector's most compelling investment attribute remains its supply outlook. Development feasibility continues to be challenged by construction cost escalation, labour constraints and higher funding costs, with future supply forecast to be 41% below historical delivery levels and 35% below projected demand growth. This structural supply-demand imbalance provides a supportive backdrop for occupancy, ADR growth and long-term income performance. For many investors, the most attractive opportunities lie in acquiring or holding existing institutional-quality assets rather than assuming development risk. Adaptive reuse and office-to-hotel conversions are also gaining traction where replacement-cost economics support value creation.