• Persistent flight to quality continues to drive occupancy gains in newer stock while older buildings account for most negative net absorption. A robust supply pipeline of premium buildings across markets may facilitate occupier upgrades to higher quality spaces.

• Slight uptick in regional rent growth led by steady leasing demand with a quarterly decrease in region-wide vacancy rates edging towards 15%. Quarterly net absorption levels also rose y-o-y owing to healthier take up in new completions.

• Investment volumes for Asia Pacific reached USD 12 billion, marking a 66% y-o-y as regional monetary policies pivot. Transaction activity rebounds with domestic owner occupiers and opportunistic investors dominating the investment landscape.

Regional leasing volumes sustained healthy momentum growing 1% y-o-y in Q3 2024 underpinned by India’s strong market performance. The continued evolution of workplace strategies has seen many large occupiers shift in favor of greater office utilisation, helping sustain return to office momentum across parts of the region.

Small- and medium-sized occupiers remained key pillars of leasing demand with vacancy being concentrated in less efficient older buildings with no sustainability certifications. Premium office rents outperformed the Grade A market due to stronger occupancy, widening the regional vacancy spread between segments. However, capital expenditure budget constraints continued to limit expansionary demand and lease renewals remained a favourable option upon expiration. India experienced significant growth in leasing demand driven by manufacturing, technology, flexible space and financial services industries. In contrast, Greater China saw conditions remain tenant favourable as landlords offered lower rents to stimulate occupancy levels facilitating cost-efficient relocations.

Asia Pacific investment volumes reached USD 34.9 billion year to date, suggesting a gradual recovery in transaction activity bolstered by a dovish policy stance adopted by central banks globally. Bid-ask spreads for prime assets continued to narrow further as a diverse group of predominantly domestic investors deploy capital selectively.

Outlook
Nearly 6.6 million sqm of new supply is expected to enter the market over the next year offering ample opportunities for tenants to upgrade their office space. Occupiers will maintain a focus on future-proofing their office portfolio, emphasising space efficiency, sustainability and technology. We anticipate more markets in Asia Pacific to experience rent growth, and with repricing pressure subsiding, 2025 is poised to be a prime year for market entry, offering early movers a competitive advantage over other investors.