In a remarkable shift, the demand for office space in the Asia Pacific (APAC) region’s top 11 markets has surged by 15.9% year-over-year, reaching an impressive 94.7 million square feet. This growth is notably driven by countries like India, Mainland China, and Japan, as highlighted in a recent report from property consultancy Colliers. The second half of 2024 showcased particularly robust demand, with 50.6 million square feet absorbed, marking a 6.1% increase from the previous year.
Strong Performance in Key Markets
The latter half of 2024 saw remarkable office space demand, especially in India, Japan, and Australia. While these markets thrived, others such as New Zealand, the Philippines, South Korea, Hong Kong, and Taiwan experienced a more subdued leasing environment. This mixed performance illustrates the varying dynamics across the region.
- India: 66.4 million sq ft leased in 2024
- Australia: Impressive growth from a lower base
- New Zealand & Others: Sluggish leasing activities
Factors Driving Office Space Demand
The surge in office space absorption can largely be attributed to several factors, including corporate expansions, the push for employees to return to the office, and the rise of global capability centres (GCCs). The report encompasses vital markets such as Australia, Mainland China, Hong Kong, India, Indonesia, Japan, New Zealand, Philippines, Singapore, South Korea, and Taiwan.
India Takes the Lead
India emerged as a frontrunner in office leasing, recording 37 million square feet of gross leasing in the latter half of 2024, which is an 11% year-over-year increase compared to the same period in 2023. This growth is particularly significant against the backdrop of a competitive APAC market.
- Technology Firms & Flex Space Operators: Accounted for 46% of demand in major cities during H2 2024.
- New Supply: Over 30.3 million sq ft completed, reflecting a 7% growth year-on-year.
Major Cities Driving Demand
Bengaluru and Hyderabad were key players in the office market during the latter half of 2024, driving more than half of the demand for Grade A office space. Despite the increase in leasing and supply, vacancy rates in India remained stable at approximately 17%.
“Unlike broader trends, India observed a 7% year-on-year growth in new supply, contributing to 60% of the new offerings in APAC during H2 2024. This trend sets a positive outlook for 2025, with balanced economic growth and anticipated stabilization in inflation,” noted Arpit Mehrotra, Managing Director of Office Services at Colliers India.
GCCs Fueling Growth
During the latter half of 2024, GCCs leased a substantial 15 million square feet of office space in India, representing over 40% of total leasing. Factors such as competitive rental rates, a rich talent pool, and high language proficiency are pivotal in fostering the growth of GCCs and outsourcing hubs in the country, as highlighted by Vimal Nadar, Senior Director and Head of Research at Colliers India.
Looking ahead, Colliers’ research anticipates a strengthening of both demand and supply across most APAC markets in 2025, with vacancy rates expected to stabilize, paving the way for a vibrant office space market.
