The Asia-Pacific office market will grow significantly by 2025, as Colliers reports a 10.7% year-over-year demand increase in Q3 2024. Strong leasing in India, New Zealand, and Singapore, where growth exceeded 30%, drove demand for Grade A office space to reach 2.2 million square metres. India led the region, accounting for 70% of demand, with Bengaluru and Hyderabad capturing over half of the Grade A absorption. Meanwhile, competitive rents and diverse occupier interest further strengthened India's position. Asia-Pacific markets anticipate supply growth, yet experts expect rental rates to remain steady as supply and demand reach equilibrium.
Colliers' recent data highlights a 10.7% surge in demand across top regional markets on a year-over-year (y-o-y) basis during Q3 2024, indicating substantial growth in the Asia-Pacific office market by 2025. According to Colliers' Asia-Pacific Office Market Insights Q3 2024 report, demand for Grade A office spaces across Asia-Pacific grew 10.7% year-over-year, reaching 2.2 million square metres (23.7 million square feet) as prominent markets across the region demonstrated robust momentum, suggesting a promising 2025.
Countries like India, New Zealand, and Singapore showcased particularly strong demand growth, with annual leasing activity in these markets rising by over 30%. This sharp increase highlights the revival of demand across Asia-Pacific's major office markets. Driven by strong occupier interest in premium spaces, rental rates in India's major office markets have entered a growth phase, with annual increases reaching up to 10% in Q3 2024, according to Arpit Mehrotra, Managing Director of Office Services at Colliers India.
Mehrotra noted that after a period of significant recovery, the Indian office market is transitioning to an expansionary phase, with rents expected to firm up further. While rental growth will vary across different Indian cities, the overall property cycle aligns with key Asia-Pacific markets, including Australia, Japan, and New Zealand. Mehrotra added that competitive rentals combined with strong demand from diverse occupier segments will further bolster India's stature within the Asia-Pacific office market.
India has firmly positioned itself as the leading contributor to Asia-Pacific office leasing activity, accounting for 1.61 million square metres (17.3 million square feet) in Q3 2024. In fact, over 70% of the region's total office demand stemmed from India, followed by China at a distant 17%. In India, Bengaluru and Hyderabad absorbed over half of the Grade A office space, asserting robust regional demand. India also kept pace with demand through 1.34 million square metres (14.4 million square feet) of new office completions in Q3 2024, helping maintain vacancy levels around a stable 17%. On the supply front, the Asia-Pacific region anticipates a wave of project completions in prominent markets, which will likely contribute to considerable supply growth over the upcoming quarters. However, Colliers' analysis indicates that overall rental rates may remain steady, with supply-demand dynamics poised to balance each other, despite ongoing uncertainties in specific markets.
Colliers' recent data underscores a robust resurgence in the Asia-Pacific office market, with a notable 10.7% surge in demand during Q3 2024, led predominantly by India. This growth trajectory, marked by substantial leasing activity and rising rental rates, indicates a promising outlook for 2025. Despite varying rental trends across different cities, the region is poised for balanced growth, driven by strong occupier interest and significant new office completions.
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