The office real estate market in the Asia Pacific region is showing signs of recovery and growth as we move into 2025. With strong economic fundamentals, rapid urbanisation, and ongoing demand for premium office space, several cities across the region are emerging as high-potential destinations.
While the global office market has faced challenges, particularly with the rise of hybrid working models, certain Asia Pacific markets are proving resilient, offering robust growth opportunities for investors and occupiers alike.
The following explores key cities that show the most promise, including Singapore, Tokyo, Sydney, Ho Chi Minh City, and Bangalore, based on current trends and future projections.
Singapore: A Global Financial Hub with Steady Growth
Singapore continues to be a focal point for commercial real estate growth in the Asia Pacific region. As one of the world’s leading financial hubs, it is benefiting from sustained demand for premium office space, driven largely by financial services, tech firms, and multinational corporations establishing their regional headquarters.
According to a recent report by Savills, the office rental market in Singapore is expected to experience continued investment growth into 2025, underpinned by limited new supply and robust leasing demand.
Despite the hybrid working trend, many businesses in Singapore are opting for flexible work arrangements that still require well-located office spaces for collaboration and client-facing activities. Also, the government’s commitment to maintaining Singapore’s competitive edge as a business-friendly environment, through regulatory support and strategic investments, contributes to its appeal.
The city-state also boasts a highly developed infrastructure and excellent connectivity, factors that attract both international and regional companies.
Fact-backed Insights:
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- Singapore’s GDP growth is forecast to rebound to 3-4% in 2024-2025, boosting business confidence and office space demand.
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- Vacancy rates in Grade A offices are expected to remain low due to limited supply and steady demand from the tech and financial sectors.
Tokyo: Modernisation Amid Shifting Work Patterns
Tokyo, one of the largest metropolitan economies globally, is positioning itself as a leading office real estate market in the Asia Pacific. While Tokyo’s office sector has seen fluctuations due to the rise of remote and hybrid working, the city is responding by modernising its office stock and offering more flexible leasing arrangements to attract companies back into physical spaces.
The Japanese government’s focus on digital transformation and creating “smart cities” is expected to bolster demand for office space, especially in high-tech and innovation-driven sectors. By 2025, Tokyo is forecasted to see a modest but steady recovery in office rents, particularly in prime districts like Marunouchi and Shibuya, which are popular among international corporations.
Key Drivers:
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- Tokyo’s office market is adapting to hybrid working models, which are reshaping the need for flexible spaces rather than traditional, large office layouts.
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- Prime office locations in central Tokyo are likely to see rent increases due to continued demand from global corporations and a limited supply of high-quality office spaces.
Sydney: Sustained Demand for Premium Office Space
Sydney remains a highly attractive office real estate market, bolstered by strong economic fundamentals and a diversified business landscape. The city is home to many of Australia’s largest corporations, including those in the financial, legal, and tech sectors. According to Knight Frank, Sydney’s office market is expected to experience sustained demand into 2025, particularly for Grade A office space in the central business district (CBD).
With the return to office life gaining momentum post-pandemic, companies are seeking premium office environments that support flexible working arrangements while offering attractive amenities and prime locations. Sydney’s commercial real estate market also benefits from Australia’s political stability, making it a safe haven for international investors looking to diversify their portfolios.
Supporting Data:
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- Sydney’s office vacancy rate is projected to decline in 2025 due to limited new supply and ongoing demand from corporate occupiers.
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- A significant portion of the demand is expected to come from multinational firms seeking high-quality office spaces in prime locations within Sydney’s CBD.
Ho Chi Minh City: A Rising Star in Southeast Asia
Ho Chi Minh City, Vietnam’s commercial capital, is rapidly emerging as one of the most promising office real estate markets in Southeast Asia. The city’s economy has been growing at an impressive rate, driven by a combination of manufacturing, technology, and foreign direct investment.
According to a report from JLL, demand for Grade A office space in Ho Chi Minh City is expected to increase significantly over the next few years, driven by multinational corporations setting up offices in the city.
As Vietnam continues to position itself as a manufacturing and tech hub, office space demand is likely to follow, particularly in sectors such as software development, fintech, and digital services. Additionally, Vietnam’s young and growing workforce is a key driver of corporate expansion in the city, making it an attractive destination for companies seeking to tap into the region’s growth.
Market Dynamics:
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- Ho Chi Minh City’s office vacancy rate is currently low, and this trend is expected to continue as more foreign investors enter the market.
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- The city is seeing a shift towards modern office developments with smart, sustainable design features, aligning with global corporate trends.
Bangalore: The Silicon Valley of India
Bangalore, often referred to as the “Silicon Valley of India,” is a standout office real estate market in Asia, thanks to its booming tech industry. The city is home to a thriving ecosystem of technology companies, startups, and global enterprises. As companies in the tech sector continue to expand, demand for high-quality office space in Bangalore is set to increase through 2025.
While India has seen a significant shift towards hybrid work, many companies in Bangalore are still opting for physical office spaces to foster collaboration and innovation. The city’s robust infrastructure, skilled workforce, and competitive office rental rates make it an appealing destination for both domestic and international firms.
Notable Statistics:
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- Office space absorption in Bangalore reached 14.6 million square feet in 2023, one of the highest in Asia, and this trend is expected to continue into 2025.
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- Bangalore’s competitive rental rates, coupled with strong demand from tech companies, make it a top choice for office real estate investment.
A Bright Future
The office real estate markets in Asia Pacific are poised for significant growth in 2025, with cities like Singapore, Tokyo, Sydney, Ho Chi Minh City, and Bangalore leading the charge.
Each of these markets offers unique advantages, from financial strength and tech innovation to attractive rental yields and sustainable urban development. Despite the challenges posed by hybrid working models, the demand for high-quality office spaces remains strong, particularly in prime locations where businesses continue to invest in premium environments for their employees and clients.
As we move into 2025, investors, occupiers and suppliers looking to tap into the growth potential of the Asia Pacific office market should closely monitor these key cities, each of which is set to offer robust opportunities for expansion and development.
