APAC Grade A office supply to increase by 7% this year

This is higher than the 4% growth in 2024.

According to a recent report from Knight Frank, in Q4 2024, prime office rents in the Asia Pacific region resumed its decline, falling 0.4% on a quarter-on-quarter basis, after remaining flat in the preceding quarter.

Consequently, the region’s rent registered a full year decline of 1.6% in 2024, moderating from the 2.4% drop in 2023. Similar to Q3 2024, 16 out of the 23 monitored cities reported stable or increasing rents year-on-year.

Here’s more from Knight Frank:

Occupier demand remained subdued in the Chinese mainland markets, which has continued to grapple with slow economic growth and a high supply pipeline. However, Brisbane continued to lead the region in terms of rental growth, as sustained occupier demand, combined with owners keen to push higher face rents to support valuations, lifted prime rents by 11.8% in 2024.

Regionwide vacancies fell for a second consecutive quarter, falling 0.3 percentage points to 14.5% in Q4 2024, largely due to tightening availabilities in India and Southeast Asian markets. However, with the delivery of new supply deferred in a number of markets, the region’s stock of prime Grade A office space is expected to rise by about 7% in 2025, up from just over 4% in 2024. 

The bulk of the region’s new supply, at over 40%, will be delivered in Chinese mainland markets. Consequently, occupier conditions in the Asia-Pacific will continue to remain tenant friendly.

Some of the strongest rental uplifts will be seen in Australian markets, as the development pipeline contracts. While a flight-to-quality trend will fuel demand for well-located prime office spaces that boast high sustainability specifications, overall rent growth is unlikely to materialise. Regional vacancies are expected to rise with rents likely to soften by 2-3%, largely weighed down by lacklustre demand in Chinese mainland markets.