Property investors turn selective as sales near $40b

First-half transactions already hit $31.1b, with commercial mega-deals leading the surge.

Real estate investors are expected to be more selective in the second half (H2) of the year, focusing on scarce, high-quality assets.

“Investment activity in H2 2026 is expected to be more measured and selective, as investor demand focuses on scarce, high-quality assets such as prime office buildings, freehold industrial properties, and selected hospitality and living-sector assets, where limited supply continues to support their appeal,” Knight Frank Singapore said in its Investment Market Update Q2 2026.

Data from Knight Frank showed that total sales value reached $31.1b in the first six months (H1) of 2026. This was despite a 6.2% quarter-on-quarter (QoQ) decline in real estate investment sales to settle at $15.1b in the second quarter.

“Nevertheless, quarterly investment activity in 2026 thus far has been robust above the $10b level, supported by the continued favourable interest rate environment that improved yield spreads and enhanced positive carry across diverse asset classes,” the analysis read.

Galven Tan, CEO of Knight Frank Singapore said the strong investment activity in the first six months of the year reflects the market’s ever-increasing appeal as a “Switzerland of the East,” with investors favouring assets that offer recurring income and long-term value.

Shaun Poh, executive director and head of capital markets at Cushman & Wakefield Singapore, said in a separate analysis that investor activity is becoming more selective, but capital remains available for high-quality assets.

Cushman & Wakefield data showed that Singapore’s real estate investment market is expected to surpass pre-pandemic levels in 2026, after investment volumes reached $35.2b in H1. This projection is supported by declining interest rates, limited supply, and resilient occupier demand.

Moreover, easing financing costs and healthy leasing fundamentals are expected to drive investment and market expansion amidst geopolitical developments, said Wong Xian Yang, head of research, Singapore & Southeast Asia, Cushman & Wakefield.

Per sector, Knight Frank said the residential sector reached $5.3b in investment sales value in the second quarter, increasing 12.2% QoQ, led by public land sales.

The commercial sector was the largest contributor for the third consecutive quarter, with $8.0b in Q2 2026. Activity was driven by two mega-deals, the acquisition of The Paragon by CapitaLand Integrated Commercial Trust for $3.9b and the sale of Asia Square Tower 2 by CICT to IOI Marina View for $2.5b.

Meanwhile, the industrial sector investment sales fell 80.8% QoQ to $643.7m. Activity was supported by several larger private transactions, including the acquisition of Hup Hin Building for $133.9m by CapitaLand Ascendas REIT.

“In the living and hospitality sectors, four hotel transactions were recorded during the quarter, generating $1.2b in investment sales, underscoring sustained investor appetite,” Knight Frank said.

In the last six months of the year, Knight Frank said “consortium-led acquisitions involving investors with complementary investment objectives may become more prevalent as a way to pool capital and diversify risk.”

“Barring a significant deterioration in market conditions or unexpected widespread systemic shocks, Knight Frank expects total investment sales for the full year 2026 to approach $40b, similar to 2025,” the company noted.