Asia Pacific Office Outlook 2024 (Cushman & Wakefield) 08 January 2024
Cushman & Wakefield’s 2024 Asia Pacific Office Outlook provides supply, demand, vacancy and rent data forecasts for cities in Australia, China, India, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
REGIONAL OVERVIEW
Key Messages:
- Inflation, though largely improved, remains above target bands in most markets across the region; a ‘higher for longer’ interest rate scenario is anticipated.
- Asia Pacific economic growth is expected to slow but to remain in positive territory (3.5% to 4.0% real average annual growth) in 2024.
- Despite a weaker economic outlook, regional office demand is forecast to reach pre-pandemic levels in 2024—but above average levels of new supply will drive vacancy higher.
- Rental growth is forecast to remain flat in 2024 before slowly accelerating from 2025.
- Newer, high-quality buildings are likely to outperform given the ongoing flight to quality.
Against a volatile economic backdrop, the Asia Pacific office market remains steadfast and continues to grow. Approximately 50 million square feet (msf) of Grade A office stock was absorbed across the region’s top 25 cities during the first nine months of 2023, with a further 12 msf expected in the final quarter. Annual office demand in 2023, forecast at 62 msf, is an 11% improvement on last year’s 55 msf.
New supply in 2023 will total 109 msf, outstripping demand and causing vacancy to tick upwards to 17.6% from 16.1% in 2022. Rental growth has subsequently slowed and is likely to be down around 0.5% on a weighted average basis.
The outlook remains broadly skewed to the positive. Demand is forecast to increase to 83 msf in 2024 and to 87 msf in 2025, which would match pre-pandemic performance. However, waves of new supply are also expected, with nearly 235 msf of completions forecast over the next two years to place further upward pressure on vacancy, which is now expected to peak at 18.4% in 2024 and then hold steady through 2025. This will keep downward pressure on rents which are likely to remain flat in 2024, at the weighted regional average level, before slowly accelerating from 2025. Accordingly, the window of opportunity remains open for occupiers over the near term.
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