APAC Office Supply Needed as Demand from Occupiers Grow


The best is yet to be for occupier and real estate investment markets in Asia Pacific, as the region builds on positive dynamics from 2017.

New development projects in Tokyo are set to surge from 2018 to beyond even the 2020 Olympic Games. Real estate developers continue to be backed by favorable financial conditions. Japan is also catching up on the coworking trend. Major Japanese developers are looking to make headway in the coworking space. This type of positive activity will accelerate the adoption of innovative and collaborative workspace solutions for both existing companies and startups.


In Korea, there is an increasing demand for shared workplaces. Many asset management companies are trying to attract these coworking space providers to reduce vacancy risk and maximize weighted average lease terms; coworking providers typically take on a long-term lease contract in large spaces.

Decentralized office markets in China’s tier one cities continue to attract new occupiers and investors as a wave of new, high quality developments come to the market. It is expected that with yields for office assets in core locations remaining at extremely low levels, good quality office assets in decentralized locations will continue to attract investors with higher yields and good potential for further capital value growth.

Meanwhile in Hong Kong, competition for prime office space is expected to intensify, as only 10 sizable spaces (over 10,000 square feet, net) are available in Prime Central over the next 12 months. A wave of high-spec Grade A office supply set to enter the Hong Kong East and Kowloon East office markets over the next three years provides excellent lower cost alternatives for sizable tenants located in core office areas, especially those in Greater Central.

Singapore saw an influx of supply in 2017 due to the completions of Marina One and UIC Building, which injected 2.2 million square feet (msf) of prime space into the market. Going forward, supply pressure will ease significantly as pipeline supply reduces to 0.7 msf annually between 2018 and 2020.


There is little supply expected in Australia over the next 12 months. Just 160,000 square meters (sq. m.) of new and major refurbished supply is expected across Australia’s eastern seaboard markets of Sydney, Melbourne, and Brisbane in 2018, representing less than 1.5% of existing stock. Of this space, the majority will be in Melbourne and has already been pre-committed.

While the IT-BPM sector will be the dominant demand driver in the office market in India, Pharmaceuticals, Consulting, BFSI sectors will take greater strides in occupying office space. Similar to 2017, the current year too will see the highest demand for office space coming from Bengaluru, driven by consolidations, with Hyderabad emerging as a close competitor.

The construction boom in emerging Southeast Asia is set to last for another 12-24 months. Nearly 30-35 msf of office space is expected to complete by 2019, thus raising the stock by more than 20%. Cushman & Wakefield expects 2018 to remain positive with all major economies growing on par with recent highs.

To get a deeper understanding of the Asia Pacific property market in 2018, download Cushman & Wakefield’s forecast report.

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