India Fuels Double-Digit Growth in APAC Office Demand in 2024, Continued Expansion Anticipated in 2025: Report

Bengaluru, March 7 (NationPress) The demand for office space across the top 11 markets in the Asia Pacific (APAC) soared by 15.9 percent annually, reaching 8.8 million sqm (94.7 million sq ft) in 2024, primarily driven by India, Mainland China, and Japan, according to a report from real estate consultancy Colliers.

The report, released on Friday, highlights that the latter half of 2024 was particularly robust, with office demand in the region hitting 4.7 million sqm (50.6 million sq ft), marking a 6.1 percent increase compared to H2 2023, and the growth is expected to persist into 2025.

Office leasing activity was notably strong in India, which recorded 6.17 million sqm (66.4 million sq ft) of leasing throughout 2024, bolstered by a stronger second half. With 3.44 million sqm (37.0 million sq ft) of gross leasing in H2 2024, India continued to dominate office leasing in the APAC region, experiencing an 11 percent year-over-year rise compared to H2 2023, the report states.

Technology companies and flexible workspace providers together comprised 46 percent of total take-up across the top six cities in India during H2 2024. The supply of new office space remained strong, with over 2.81 million sqm (30.3 million sq ft) of completions in H2 2024, a 7 percent year-over-year growth across the leading six cities.

Bengaluru and Hyderabad spearheaded office market activity in H2 2024, collectively driving over half of India's Grade A space demand and supply. Despite an increase in leasing activity and new supply, vacancy rates in India largely stayed stable at approximately 17 percent, as noted in the report.

The latest report by Colliers, titled Asia Pacific Office Market Insights H2 2024 and Outlook 2025, attributes the significant rise in APAC office space demand to corporate growth, a return to office setups, and the expansion of global capability centers.

Demand growth in H2 2024 was particularly remarkable in markets like India and Japan, with Austrailia showcasing impressive growth from a lower base. Conversely, leasing activity remained subdued in New Zealand, The Philippines, South Korea, Hong Kong, and Taiwan during H2 2024, as highlighted by the report.

"The demand for office space in the region has been significantly influenced by India, Mainland China, and Japan. Meanwhile, leasing in Austrailia saw substantial growth during H2 2024, although from a comparatively lower base. The new supply of office spaces diminished across most markets in H2 2024, leading to a 16.9 percent annual decline at the APAC level. In stark contrast, India experienced a 7 percent year-over-year increase in new supply, contributing 60 percent of the new supply in the APAC region during H2 2024. As we look forward, we expect to see improved demand-supply dynamics in 2025, supported by balanced economic growth and a likely moderation in inflation," stated Arpit Mehrotra, Managing Director of Office Services at Colliers India.

“With a 70 percent share in leasing and a 60 percent share in new supply during H2 2024, India remains a leading office market in the APAC region. Strong domestic leasing, combined with the increasing uptake of Grade A spaces by Global Capability Centers (GCCs), continues to drive office demand in India. During H2 2024, GCCs leased 1.4 million sqm (~15 million sq ft) of office space in India, accounting for over 40 percent of the total leasing during this period. Factors like rental arbitrage, abundant talent, and language proficiency will further bolster the expansion of GCCs and outsourcing hubs in India," noted Vimal Nadar, Senior Director and Head of Research at Colliers India.