JLL: Commercial real estate investment in the Asia-Pacific region in the first quarter increased by 31% year-on-year to a record high of $47 billion.

Jones Lang LaSalle (JLL) latest data shows that commercial real estate total investment in the Asia-Pacific region in the first quarter of 2026 reached $47 billion, a 31% year-on-year increase, setting a new record for the region's first quarter. Large cross-border transactions in the Asia-Pacific region continued to show strong performance, with cross-border fund flows within the region increasing by 87% year-on-year to $16.3 billion, reaching a new single-quarter historical high. In Hong Kong, commercial real estate investment in the first quarter increased by 41% year-on-year to $1.6 billion, mainly due to improvements in the financing environment and funds re-focusing on core office and retail spaces. With the Hong Kong Interbank Offered Rate (HIBOR) falling from 3.1% at the end of December last year to 2.2% at the end of March this year, the decrease in borrowing costs has alleviated developer funding pressures, improved fund allocation flexibility, and boosted investment transactions. In the office investment market, as core asset prices approached short-term lows, market liquidity improved slightly in the first quarter. Notable transactions during the quarter included DAH SING Group's acquisition of Victoria Centre for $107 million and Golden Diligent Ltd's acquisition of a unit at LIPPO Centre for $32 million. The retail market also remained active, driven by mainland Chinese restaurant brands buying for self-use. While there were still distressed retail asset transactions, price discounts have narrowed, with initial returns dropping from around 9.4% in the fourth quarter of last year to about 6.4% in the first quarter of this year. Furthermore, as the Hong Kong government continues to promote Hong Kong as a regional education hub, many educational institutions are actively purchasing office and retail spaces. This trend is also prompting investors to focus on residential, hotel, and potentially converted into Purpose-Built Student Accommodation (PBSA) commercial properties; such assets are more resilient in demand and have attractive return prospects. Chan Kwok Cheung, head of JLL's Hong Kong Capital Markets division, stated that the ongoing geopolitical uncertainties in the Middle East have led to inflationary pressures on supply chains, adding uncertainty to interest rate trends, causing investors to be more cautious. Therefore, despite signs of a recovery in the commercial real estate market, the expected recovery is likely to be concentrated in specific sectors; with overall leasing demand still weak, funds are expected to primarily target high-quality assets. He also mentioned that Asia is increasingly seen as a relatively stable and defensive investment market, and it is expected that Middle Eastern institutional investors will reallocate their assets to increase their investments in the Asia region; Hong Kong, with its inherent advantages, is expected to be a major beneficiary of this influx of funds.