1. Vacancy set to peak amid oversupply pressure

    Asia Pacific will continue to witness a supply boom in 2024, with nearly 70 million sq. ft. NFA of new Grade A office space due to come on stream. Almost two-thirds of markets are forecasted to see an increase in office vacancy, but availability in Seoul will remain exceptionally tight. Landlords in markets with high vacancy will have to improve their product and service offering to attract and retain tenants.

  2. Cost control to remain top priority

    Despite corporate revenue growth among office-using industries projected to be stronger this year, cost control will remain high on the occupier agenda. As tenants carefully manage real estate costs, they will be more inclined to renew leases; focus on assets offering the best value for money; and prioritise workplace optimisation.


  1. Demand to improve as year progress

    Leasing demand will be led by the tech sector, which is likely to witness robust growth in corporate revenue in 2024, particularly in the software and services category. The demand recovery in mainland China is expected to pick up in H2 2024 after more supportive economic measures and easing policies are put in place. CBRE expects Asia Pacific office demand to slightly improve in 2024, with gross leasing volume growing by 0 to 5% y-o-y in 2024.

  2. Prime office space with ESG features in demand

    Workplace optimisation and sustainability requirements will continue to drive flight to quality demand over the course of this year. High quality premium office space in city centres and ESG-compliant buildings will remain highly sought after by occupiers.


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Office demand to pick up slightly

Despite slower global economic growth, leading companies in Asia Pacific are expected to maintain current levels of revenue growth, led by tech firms. Although cost control is still a priority, CBRE maintains a cautiously positive view for the gradual recovery of office demand in 2024.

CBRE’s December 2023 Asia Pacific Leasing Market Sentiment Index indicated that tenant enquiries and site visits are increasing. While appetite for expansion is improving, most companies are opting for lease renewals or same-budget relocation.

Small to medium size transactions are expected to account for the bulk of activity in 2024. CBRE forecasts a positive year for the leasing market, with regional gross leasing volume set to grow by around 0 to 5% y-o-y.

Firms in tech sub-sectors covering software and services are expected to display the strongest expansionary demand, supported by swift revenue growth. With revenue growth in the banking and financial sector forecasted to soften, financial institutions will remain cautious towards committing to additional space, with wealth management and insurance leading demand.

Korea and Singapore will remain landlords’ markets but leasing activity will be constrained by tight availability. India will remain upbeat, partly driven by the growth of multinationals’ global capability centres and growing occupier confidence. 

Other positive markets will include Sydney, where net absorption is expected to turn positive in 2024 as large occupiers have now mostly completed consolidation and contraction moves.

While demand in mainland China gradually recovered in H2 2023, a full rebound remains elusive. Economic stimulus measures, policy easing, and new demand from A.I., big data and high-end manufacturing companies should hasten the recovery in H2 2024, although leasing volume will remain below trend.

Figure 5: Leasing sentiment index by market

Note: Market sentiment is based on the simple average of net intentions (net % difference between positive and negative answers) of seven surveyed indicators.
Source: APAC Leasing Market Sentiment Survey, CBRE Research, December 2023.

(Click to enlarge)

Figure 6: Expansionary demand by sector

Source: APAC Leasing Market Sentiment Survey, CBRE Research, December 2023.

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High quality and green space to see growing demand

Flight to quality has been driving demand for office space over the past few years as occupiers focus on workplace optimisation. CBRE expects this to remain a prominent trend in 2024, with flight to new-build and upgrading relocations set to continue over the course of the year. 

With multinationals striving to reach net zero deadlines – many of which fall in 2030 – ESG criteria will have a stronger bearing on leasing decisions. 

About two-thirds of CBRE leasing professionals responding to a recent CBRE survey stated that occupiers prefer Grade A offices in city centres or in major business districts with good connectivity. Occupiers also tend to select newly built Grade A assets featuring high quality space and strong ESG performance. There is little interest in Grade B offices and decentralised offices in areas lacking good transportation infrastructure. These trends will weigh heavily on leasing activity over the next 12 months.

Fully fitted office space and flexible offices will be keenly sought after by occupiers with tight CapEx constraints; a trend that will drive interest in office space that can help occupiers achieve their cost containment targets.

Figure 7: Types of offices occupiers are looking for

Source: CBRE Research, January 2024.

(Click to enlarge)

New supply to remain substantial

Asia Pacific will continue to witness a supply boom in 2024, with new Grade A supply in 2024 projected to reach nearly 70 million sq. ft. NFA, representing about 7% of overall Grade A office stock in 2023. With new supply set to remain elevated into 2026, vacancy will stay high for the next three years.

As new office real estate development in Asia Pacific continues to outpace the recovery of office demand in 2024, regional Grade A vacancy is forecasted to climb to an all-time high of over 20%. Landlords in markets with high vacancy will need to improve their product and service offering to attract and retain tenants. Occupiers will delay relocation decisions until more options become available later this year. 

Oversupply pressure will be at its highest in mainland China and India, which will account for a combined 75% of new office space in 2024. The jump in the office vacancy rate will be most prominent in Shanghai and Guangzhou, each of which is projected to witness an increase of around 300bps. 

Vacancy risk in Bangkok will also be significant as the launch of One Bangkok’s three office towers adds a large volume of new and secondary space to the market. While other oversupplied Southeast Asian markets such as Jakarta will finally see a thinning of their development pipelines in the coming two years, vacancy will remain high due to the slow absorption of existing space.

The Sydney, Melbourne and Auckland CBDs will experience higher vacancy pressure in 2024, followed by a mild improvement in 2025. In contrast, Brisbane will see no new supply for a second consecutive year. 

Availability in Seoul will be extremely tight, with new supply due to come on stream in 2024 already mostly pre-committed, pushing down vacancy to near historical lows. While Tokyo may see a temporary drop in the vacancy rate, above-average supply slated for completion in 2025 is likely to lead to another fall in H2 2024. Singapore will witness a temporary surge in vacancy along with the delivery of IOI Central Boulevard Towers in early 2024, which is currently 40% pre-let.

Figure 8: Vacancy rate by market

Source: CBRE Research, January 2024.

(Click to enlarge)

Nearly all markets to remain in favour of tenants

Regional Grade A rents will continue to lack growth momentum in 2024 amid an ongoing supply-demand imbalance. Individual market performance will diverge, however, with almost half of cities tracked by CBRE projected to remain in the downward rental cycle and the rest forecasted to either record slower or low single-digit growth.

Brisbane and Seoul will register the strongest rental growth, at rates above 5%. In Australia, Perth and Sydney also expect to witness effective growth in rents and the reduction of incentives but mainly for Grade A buildings in core areas, which benefit from flight-to-quality demand. Non-core office demand in Pacific cities will remain weak. Although occupiers in Seoul will continue to find it difficult to secure space amid sub-2% vacancy, rental growth is projected to slow to 7% y-o-y after gains of more than 30% since 2020. Singapore will also see moderate rental growth as demand is partially offset by higher availability.

Rental performance in top Indian cities will vary between prime core and non-prime submarkets. Well-located buildings with good access to public transport remain highly sought after and are therefore likely to command rental premiums.  

After avoiding a major decline in Grade A rents in 2023, Tokyo is expected to see rents stabilise during H1 2024 due to the moderating supply pipeline. However, with above-average new supply slated for completion in 2025, more landlords are likely to offer attractive rental packages to attract tenants from the mid-year.

Rents in Greater China will continue to decline, albeit at a slower pace. Mainland China tier I cities are projected to enjoy a more significant uptick in leasing activity in H2 2024, paving the way for the resumption of rental growth in 2025/2026. Rents in Hong Kong SAR are expected to stay in the downward cycle until 2026 as the market continues to digest ample vacant space. 

Bangkok will see mounting downward pressure on rents due to abundant new supply due to be completed this year. Melbourne will remain one of the regional rental laggards given the slow pace of the return to the office and rising vacancy.

Figure 9: 2023E - 2024F Asia Pacific office rental forecast

Note: Grade A rents represent rents in CBDs and core locations of each representative market.
Source: CBRE Research, January 2024.

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