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| Source: Colliers landing page. Office space demand in the APAC region rose nearly 16% YoY in 2H24. |
Demand for office space across Asia Pacific's (APAC's) top 11 markets* rose 15.9% year-on-year (YoY), to 8.8 M sq m, led by India, Mainland China and Japan, in the second half of 2024.
2H24 saw office demand in the region reaching 4.7 M sq m, a 6.1% rise compared to 2H23 according to global diversified professional services company Colliers. Demand growth over this period was notable in markets such as India, Japan and particularly impressive in Australia, which had a lower base. Leasing activity, however, remained relatively subdued in New Zealand, the Philippines, South Korea, Hong Kong, and Taiwan in 2H24.
Colliers' Asia Pacific Office Market Insights H2 2024 and Outlook 2025 report found the significant increase in APAC office space demand to be driven by corporate expansion, return-to-office initiatives, and the growth of global capability centres. Office market activity was strong in India, which saw 6.17 M sq m of leasing during 2024, and 3.44 M sq m of gross leasing in 2H24, an 11% YoY rise compared to 2H23.
In India, technology firms and flex space operators accounted for a combined 46% of the total takeup across the top six cities during 2H24. New supply remained robust, with over 2.81 M sq m of completed space in 2H24, a 7% YoY growth across the top six cities. Bengaluru and Hyderabad led the office market activity during this period, cumulatively driving more than half of India's Grade A (premium) space demand and supply. Amidst an uptick in both leasing activity and new supply, India vacancy levels largely remained stable at around 17%.
"The APAC office market remained upbeat during 2H24, with demand rising 6.1% YoY to 4.7 M sq m. Office space demand in the region continued to be driven by India, Mainland China and Japan. At the same time, leasing in Australia grew manifold during 2H24, albeit on a comparatively lower base.
"New office supply declined across most markets in 2H24, resulting in a 16.9% annual drop at the APAC level. Contrary to larger trends, India witnessed 7% YoY growth in new supply, contributing 60% of the new supply in APAC region during 2H24. Looking ahead, we anticipate improved demand-supply dynamics in 2025, supported by balanced economic growth and likely moderation in inflation," said Arpit Mehrotra, MD, MD, Office Services, Colliers India.
"With over 70% share in leasing and 60% share in new supply in 2H24, India remains one of the leading office markets in the APAC region. Strong domestic leasing, coupled with increasing Grade A space uptake by global capability centres (GCCs), continues to fuel office demand in India. During 2H24, GCCs leased 1.4 M sq m of office space in India, accounting for over 40% of the overall leasing during the period. Factors such as rental arbitrage, abundant talent, and language proficiency will continue to support the expansion of GCCs and outsourcing hubs in India," elaborated Vimal Nadar, Senior Director & Head of Research, Colliers India.
Colliers' research forecasts that both demand and supply will strengthen across most APAC markets in 2025, with vacancy rates expected to remain range-bound. Mike Davis, Colliers' MD of Occupier Services, Asia Pacific, said: "The outlook for the office occupier market remains positive, with strong demand set to drive further market shifts in the year ahead. High-activity markets may witness continued rental growth, particularly in peripheral business districts.
"The overall outlook for 2025 indicates a sustained momentum for the APAC office leasing market. We expect to see steady growth and continued resilience, driven by stable economic growth, corporate expansions, and the return-to-office trend. The flight-to-quality will dominate, with occupiers seeking modern, flexible and sustainable spaces that foster collaboration and productivity."
*The report captured the key markets of Australia, Mainland China, Hong
Kong, India, Indonesia, Japan, New Zealand, Philippines, Singapore,
South Korea and Taiwan.