Half of APAC office occupiers expand amidst IPO surge and rate cuts

Hong Kong and Singapore see demand for office space grow despite economic challenges.

Despite ongoing economic pressures and mixed market sentiment in Asia-Pacific, demand for office space is on the rise, with half of office occupiers planning to expand. The expansion is largely driven by the surge in IPO activity and rate cuts, with both Hong Kong and Singapore emerging as key hotspots for office demand.

According to Thomas Chak, Head of Capital Markets & Investment Services at Colliers Hong Kong, the IPO market has seen a remarkable uptick. "Alongside rate cuts, which are expected to continue into the second half of 2025, the IPO boom is driving demand," Chak said.

In the first half of 2025, Hong Kong raised $107 billion through IPOs, a staggering 700% increase year-over-year.

"This is driving demand for professionals like bankers, accountants, and lawyers," Chak explained. As a result, financial institutions and companies are expanding their office footprints to accommodate the growing workforce.

Hong Kong's government initiatives aimed at attracting family offices and capital are further fueling market growth. "We’re seeing more institutions returning to Hong Kong, and with the government’s support, activity is expected to rise in the second half of 2025," Chak added.

In Singapore, stability in the market is pushing demand for office space. Desmond Sim, CEO of Realion, noted, "Singapore is becoming more of a gateway for Southeast Asia, a rapidly growing sector.”

He explained that with vacancy levels tightening, companies are opting for higher-quality office spaces, including new buildings or shadow spaces. Major players in banking, finance, pharmaceuticals, and legal services remain active in the market, further driving demand.

The APAC region is also benefiting from rate cuts. Chak pointed out that financing costs have dropped significantly, with the highball rate falling from 5.5% to under 1%. Though banks remain cautious about non-recourse loans, more institutions are beginning to seek opportunities, especially in Hong Kong.

In Singapore, narrowing yield spreads are attracting investors back into the market. "The negative yield spread is narrowing, with some potentially breaking even," Sim explained. This shift is prompting family offices and high-net-worth individuals to invest in Singapore, with a focus on capital preservation rather than immediate returns.