Why APAC office markets will still see rental growth this year

Moderate increases of 1-2% are expected to materialise.

According to Christine Li, head of research, Asia-Pacific, Knight Frank, although the region’s rent is expected to decline in 2025, much of the weakness is largely concentrated in Chinese mainland markets. The rest of Asia-Pacific is still expected to see moderate increases of 1 to 2%, with leasing volumes anchored by markets in India.

Li noted that leasing activity will also remain healthy in Tokyo, as strong demand for new office developments will gradually tighten availability in the city. As inflation concerns subside in the region, geopolitics will be the key variable to watch in 2025.

“This shift in focus is likely to influence occupier behaviour, with many adopting a defensive stance and showing a strong preference for renewing leases rather than relocating. The region’s softening rents and ample new supply will be conducive to those looking to upgrade their office spaces,” she added.

Looking ahead, the Asia-Pacific office market is poised for significant changes in 2025, with a 7% increase in prime Grade A office space expected, up from 4% in 2024. Over 40% of the region's new supply will be delivered to mainland Chinese markets.