Asia Pacific Office Demand Surges 10.7% As Occupiers Chase ‘Flight to Quality’

Bangalore / November 8, 2024: New Colliers’ data show the Asia Pacific office market demand is expected to grow across top markets, surging 10.7% year-on-year (y-o-y) in the third quarter of 2024.

Colliers’ Asia Pacific Office Market Insights Q3 2024 report found Asia Pacific Grade A office demand surged 10.7% in Q3 2024 (y-o-y) to 2.2 million sqm (23.7 million sq ft) as major markets across the region strengthened, signalling a potentially strong 2025, Colliers’ India said in a statement.

The demand momentum was particularly strong in countries such as India, New Zealand, and Singapore, with annual growth in office leasing in these markets exceeding 30%.

At 1.61 million sqm (17.3 million sq ft), India particularly continued to lead APAC office leasing activity. Over 70% of the office demand in Q3 2024 came from India, distantly followed by China at 17%. Within India, more than half of the Grade A space uptake came from Bengaluru and Hyderabad. With over 1.34 million sqm (14.4 million sq ft) of new completions in Q3 2024, overall new supply in India too followed the demand trajectory, thus keeping vacancy levels rangebound at around 17%, the statement said.

“Driven by robust demand and strong occupier interest in premium spaces, average rentals in major office markets across India are in the growth phase, having risen by up to 10% annually in Q3 2024. After seeing significant recovery gains, the Indian office market is set to enter an expansionary phase, wherein rents are expected to firm up further. Although the rental growth will vary across Indian cities, the overall rental property cycle aligns with select markets such as Australia, Japan, and New Zealand. Additionally, competitive rentals and robust demand from diverse occupier segments will continue to strengthen the positioning of the India office market in the APAC region,” said Arpit Mehrotra, Managing Director, Office services, Colliers India.

“With positive economic growth outlook in most APAC countries, office markets across the region are expected to remain resilient, with increased emphasis on ‘flight to quality’ and ESG-aligned workspaces. This trend is particularly evident in India, where space uptake in premium office spaces is supported by occupiers’ appetite for best-in-class facilities and green certifications. In response, developers are actively upgrading and incorporating sustainable elements into newer developments. Moreover, with continued traction in leasing activity, India can potentially witness 5-6 million sqm (54-64 million sq ft) of Grade A space uptake in 2024, reinforcing its position as a key player in APAC’s commercial real estate landscape,” said Vimal Nadar, Senior Director & Head of Research, Colliers India.

Mike Davis, Colliers’ Managing Director of Occupier Services in APAC, said, “The APAC office market is poised for continued growth as we look to 2025 and beyond, driven by an evolving understanding of what makes a workspace truly valuable. Office occupiers’ focus on prioritizing both productivity and sustainability, alongside their commitment to adaptability and innovation, will drive the market forward.”