Tech firms to account for up to 25% of APAC office leasing demand over the next five years

Beijing, Shanghai, Bengaluru, Shenzhen and Singapore are the top 5 technology centres in the region.

Colliers recently released an in-depth analysis of how the growth of the APAC technology sector is transforming the region’s property markets. The report provides a new ranking of the most attractive technology submarkets within major APAC cities, which should serve as a navigation tool for technology groups, as they plan expansion. Since these submarkets ought to attract strong occupier demand, property owners should also focus on these districts for investment and development opportunities.

Sam Harvey-Jones, Managing Director, Occupier Services, Asia, commented: “The technology sector is the key driver of office leasing demand in major APAC cities. While demand from MNC technology occupiers remains important, we expect APAC technology occupiers to predominantly drive demand and shape major office markets over the next five years.”

Technology firms both the fastest-growing occupiers of space and a new class of owner-occupier

Today, technology is the most important business sector globally, making up 65% of the world’s top 20 public companies by market capitalisation. We expect technology occupiers to account for 20% to 25% of demand for leased office space in the APAC region over the next five years. Asia’s technology giants, in particular, are expanding quickly, and have become a major driver of leasing demand. Many Asian technology companies, especially Chinese technology firms, have also become very active in investment and development of real estate. In 2020 alone, technology companies acquired nearly US$10 billion in APAC real estate assets.

Terence Tang, Managing Director, Capital Markets & Investment Services | Asia, commented: “Large technology companies, especially Chinese technology firms, have been very active in direct property investment and development across the APAC region. These firms are now a major new class of owner-occupier. We work closely with this group of occupiers, together with property owners, in providing advice to reposition aging assets and undertake joint redevelopment, to fulfil existing and expanding occupational needs of these technology firms, spanning offices, logistics and warehousing facilities, as well as data centres.”

Occupiers to expand further in key APAC technology hubs, attracting owner investment

Beijing, Shanghai, Bengaluru, Shenzhen and Singapore currently rank as the top five technology centres in APAC; they offer a compelling balance of infrastructure and talent for occupiers, and are well positioned to deliver future growth and investment opportunities for owners. Other cities are developing strengths in specific areas of technology, e.g., Seoul and Hong Kong in fintech, while new centres such as Hyderabad and Sydney are emerging. Among established technology submarkets in the major APAC cities, we highlight Shangdi in Beijing. Among upcoming submarkets, we highlight Yangpu in Shanghai, Whitefield and North Bengaluru in Bengaluru, as well as Sydney’s CBD South.

Wave of demand from technology occupiers to create new opportunities for owners

The ongoing expansion of the APAC technology sector creates opportunities for property owners beyond rental growth, as the technology sector increasingly becomes a direct investor in APAC real estate. Investors should consider technology companies as alternative buyers of aging assets or partner with these firms to redevelop their assets. Owners with land banks and development capabilities in areas like logistics warehousing or data centres should consider going into joint ventures with technology companies to develop their assets, whereas investors with passive capital may invest in real estate funds set up by technology companies that are open to third-party investment.

Click here to download the full report.