• The Asia Pacific office leasing environment remained firm in Q1 2026, underpinned by sustained demand for high-quality, well-located space—even as conditions varied across markets.

• Regional supply totaled 1.3 million s.m., slightly below Q4 2025 levels but up year-on-year. Despite new completions, vacancy edged down quarter-on-quarter, reflecting resilient absorption.

• Investment activity reached USD 24 billion—up 46% year-on-year—as capital concentrated in markets offering transparency, liquidity, and visible rental upside, keeping office the region’s most active real estate sector by volume

Across the region, leasing activity remained concentrated in high-quality, well-located assets, underscoring a clear performance divide between prime and secondary space. India led the region with a record-breaking first quarter for office leasing, driven by large pre-commitments from global technology and financial services firms expanding their delivery hubs—supported notably by active flexible workspace operators. Elsewhere, Mainland China showed early signs of leasing recovery, though rents continued to ease under persistent supply pressure. In Hong Kong, renewed demand from the financial industry lowered Central’s vacancy rate to its lowest level since 2023. Tokyo maintained a sub-1% vacancy rate, fueling robust rent growth. In Australia, Sydney’s strong CBD leasing activity—fueled in part by expansions—reinforced the broader “flight to quality,” a trend also evident in Melbourne, where leasing remained largely confined to prime-grade assets despite market-wide headwinds.

Investor priorities closely mirrored tenant preferences, with capital flowing toward high-quality assets in core locations. In Japan, competition for Grade A towers extended beyond Tokyo to Osaka and Fukuoka in search of yield. South Korea saw concentrated activity in Gangnam and Yeouido, where tight availability drove deals above asking prices. Singapore continued to attract value-add strategies, supported by institutional asset recycling and redevelopment opportunities enabled by planning incentives.

Outlook
Demand for high-specification, well-located office space will remain the dominant trend through 2026, even as over six million s.m. of new supply enters the market—potentially pushing vacancy rates higher in the near term. Ongoing geopolitical risks, particularly in the Middle East, and persistent inflationary pressure could keep monetary policy tight, reinforcing occupier and investor preference for energy-efficient, sustainable buildings. These attributes not only help manage rising operating costs but also support sustainability commitments, making them key drivers of asset competitiveness across the region.