India leads Asia Pacific office market; Accounts for 70% of demand

12 Nov 2024 CW Team

"Average rents in major Indian office markets have grown up to 10% year-on-year, fuelled by robust demand and strong interest in premium spaces," said Arpit Mehrotra, Managing Director of Office Services at Colliers India. As the Indian market enters an expansionary phase, rents are expected to firm up further.

The Asia Pacific office market grew 10.7% year-on-year in Q3 2024, totalling 23.7 million square feet, signaling a strong outlook for 2025. India, New Zealand, and Singapore saw annual office leasing growth exceeding 30%, supported by positive economic forecasts and a “flight to quality” trend, especially in India, where demand for high-end and ESG-aligned workspaces is prominent. Developers are increasingly integrating sustainable features into new buildings, with Grade A office space in India expected to reach 54-64 million square feet in 2024.

In Q3 2024, India introduced over 14.4 million square feet of new office space, keeping vacancy rates steady at around 17%, with Bengaluru and Hyderabad leading the new supply. While new office supply in the region declined by 9.8% year-on-year, countries like Hong Kong, South Korea, and Singapore saw minimal new completions. Overall, Asia Pacific supply is expected to grow in the coming quarters as large projects reach completion.

“APAC office market growth is set to continue into 2025, driven by evolving workspace needs that emphasise productivity, sustainability, and adaptability," stated Mike Davis, Managing Director of Occupier Services at Colliers APAC. However, vacancy rates remain high in markets like China, Indonesia, and the Philippines, exceeding 20%, while Japan, New Zealand, South Korea, and Singapore maintain low vacancy rates under 5% due to limited high-quality supply.

Colliers expects rental growth across Indian cities to align with markets like Australia, Japan, and New Zealand. Competitive rents and strong demand from a variety of occupier segments are likely to further strengthen India's position in the APAC office market. Rentals across the region are anticipated to remain stable as supply and demand balance, despite uncertainties in certain markets.

(ET)

India continues to lead the Asia Pacific office market, accounting for over 70% of total office demand in Q3 2024, significantly outpacing China, which held a 17% share. The Indian market recorded 17.3 million square feet in office leasing, with Bengaluru and Hyderabad driving over half of the demand for Grade A office spaces, according to Colliers. Average rents in major Indian office markets have grown up to 10% year-on-year, fuelled by robust demand and strong interest in premium spaces, said Arpit Mehrotra, Managing Director of Office Services at Colliers India. As the Indian market enters an expansionary phase, rents are expected to firm up further. The Asia Pacific office market grew 10.7% year-on-year in Q3 2024, totalling 23.7 million square feet, signaling a strong outlook for 2025. India, New Zealand, and Singapore saw annual office leasing growth exceeding 30%, supported by positive economic forecasts and a “flight to quality” trend, especially in India, where demand for high-end and ESG-aligned workspaces is prominent. Developers are increasingly integrating sustainable features into new buildings, with Grade A office space in India expected to reach 54-64 million square feet in 2024. In Q3 2024, India introduced over 14.4 million square feet of new office space, keeping vacancy rates steady at around 17%, with Bengaluru and Hyderabad leading the new supply. While new office supply in the region declined by 9.8% year-on-year, countries like Hong Kong, South Korea, and Singapore saw minimal new completions. Overall, Asia Pacific supply is expected to grow in the coming quarters as large projects reach completion. “APAC office market growth is set to continue into 2025, driven by evolving workspace needs that emphasise productivity, sustainability, and adaptability, stated Mike Davis, Managing Director of Occupier Services at Colliers APAC. However, vacancy rates remain high in markets like China, Indonesia, and the Philippines, exceeding 20%, while Japan, New Zealand, South Korea, and Singapore maintain low vacancy rates under 5% due to limited high-quality supply. Colliers expects rental growth across Indian cities to align with markets like Australia, Japan, and New Zealand. Competitive rents and strong demand from a variety of occupier segments are likely to further strengthen India's position in the APAC office market. Rentals across the region are anticipated to remain stable as supply and demand balance, despite uncertainties in certain markets. (ET)

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