In this month’s newsletter, we take a look at how capital markets across APAC are becoming more concentrated, both in who is deploying capital and where it is going. A small group of large investors now accounts for almost half of transaction volumes, cross-border capital is taking a much bigger role in Japan, and the corporate capex cycle is increasingly concentrated in technology and resources.

At the same time, higher bond yields are raising the cost of capital, without much evidence of a broader deterioration in corporate credit conditions. This month we look at what these shifts mean for real estate investment, pricing and where the next sources of demand are emerging.

Buyer concentration is highly elevated 

Year-to-date, the APAC region has seen a shift towards a more concentrated set of buyers than at any point in the past decade. The top 25 investors have taken 47% of all transaction volume this year, against a range of 32% to 38% through 2016 to 2024. In part this reflects the surge in mega-deals. Fifteen transactions of USD 1bn or more have closed in the first half, up from nine over the same period last year and five in 2023, and together they account for a fifth of all volume. They fall into three groups: single-asset core office trades in the region's gateway markets, portfolio deals and data centre platform deals, where scale is now acquired at the corporate level rather than asset by asset.

This concentration has been building for three years, but it is likely to reverse from current highs. Core strategies are getting more challenging. The pool of assets that transact above USD 1bn is finite, and while platform deals will remain a theme, we expect more capital to shift towards mid-market strategies where asset management, asset conversion or value-add plays can offer return alpha.

Japan: The handover from domestic to cross-border capital

Cross-border investors were large net buyers of Japanese property in the first half of 2026 (USD 5.4bn), and domestic investors were large net sellers. This is the largest gap in the data going back 12 years, and the spread has been increasing over the past 18 months. Through the pre-pandemic era, the two pools were broadly balanced, with domestic and foreign capital trading with each other rather than one replacing the other.

Japanese disposals have been flat for three years, so this is not a domestic selling wave. Japanese buyers have simply stepped back, cutting acquisitions by roughly a quarter since 2024. Foreign capital has filled the gap this year and now accounts for nearly 40% of all volume, the highest share on record. The buyer pool though is narrow, foreign acquisitions came through a fraction of the deal count seen a few years ago, so this is a small group of large institutions rather than a broad return of overseas money. 

No flight to quality in the bond market 

Rising bond yields have caused some concern in recent weeks, but corporate debt markets are showing little sign of a broader flight to quality. Most of the repricing has come through the risk-free rate, with government bond yields rising sharply while credit spreads have remained relatively contained.

We see the same thing in Australian listed REIT debt. The spread between AA and BBB rated bonds remains well below its historical average, suggesting investors are still comfortable taking credit risk despite the rise in overall yields.

For real estate, this distinction is important. Borrowing costs are rising because the underlying risk free rate has moved higher, rather than because lenders are demanding significantly more compensation for credit risk. This looks more like a higher cost of capital than the start of a tightening credit cycle. The result is upward pressure on required real estate returns, even if asset quality and borrower fundamentals remain sound.

Capex boom is concentrated in real estate intensive sectors

Corporate capex across APAC has surged, led by technology and mining. Semiconductor, server and electronics manufacturing investment in Taiwan, Korea and China has risen 2.5 to 3 times since 2020, while mining capex in Australia and China has almost doubled.

The scale matters for real estate because these are highly physical industries. Semiconductor plants, data centres and mines require large sites, huge amounts of power and extensive supporting infrastructure. They also bring suppliers, logistics networks and workers with them, creating additional demand for industrial space and housing around major investment clusters.

The result is a capex cycle with a much larger real estate footprint than spending in less asset intensive parts of the economy. Industrial land, logistics, data centres and housing in major technology and resource hubs are the clearest areas of exposure.