With the annual growth in office space leasing exceeding 30% growth, according to the latest data from Colliers, the Asia Pacific Grade A office demand surged 10.7% in Q3 2024 (y-o-y) to 2.2 million sq. m. (23.7 million sq. ft.). With 1.61 million sq. m. (17.3 million sq. ft.) of leasing space in Q3, India continues to lead in the APAC office leasing activity with over 70% of the office demand in Q3 2024 coming from the country and China coming in a distant second at 17%.
According to the data in the first three quarters of 2024, India had seen 4.34 mn. sq. ft. of grade A office space being picked up with a fresh supply of 3.47 mn. sq. ft. being added. The overall vacancy has also remained steady at around 17%. While Q3 saw about 1.3 mn. sq. ft. completion, a 33% increase over the corresponding quarter of last year, southern cities of Bengaluru and Hyderabad commanded a lion’s share with 64% of the new supply.
Vimal Nadar, senior director; head of tesearch, Colliers India sees the positive economic growth outlook for most countries in the Asia Pacific region to aid the office markets in the coming quarters with tenants looking for quality office spaces and those that are ESG-allied to meet targets.
“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 sq. m. (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.”
Comparatively, mainland China’s overall demand in the third quarter stood at 0.38 mn. sqm., and the supply at 1.5 mn. sq. ft. to date is a dip on a year-on-year comparison. With a significant supply expected to hit the market in Q4, Colliers expects the vacancy levels to go up. In Q3 the once buzzing Hong Kong market saw the demand shrink to -0.02 mn. sq. m. during the quarter reversing the trend of four consecutive positive quarters also leading to a decrease in rentals.
According to the report, rentals have dropped by 2.9% QoQ and 6.3% YoY in Q3 2024. With over 0.3 mn. sq. m. of new office space supply expected in the coming year further pushing the vacancy, rentals are expected to continue to decline in 2025.
Even in the industrial hub of Taiwan demand shrunk a modest 0.0003% in the third quarter with no fresh supply in the market and about 0.10 mn. sq. ft. of office space added in the 9 months of 2024. With the market continuing to be in the favour of landlords with limited A-grade supply, Collier expects the rentals to further firm up by the end of the year.
