Demand for Grade A offices is expected to return to pre-pandemic levels in 2024, according to Cushman & Wakefield analysis, but vacancy rates are also expected to rise due to record levels of new supply.
Also read: Office rents in top seven cities increase by 7% year-on-year despite slump in rental properties in the first half of 2024 A global real estate services firm has announced its 2024 Asia-Pacific office outlook, with the top eight real estate cities in India increasing by 7% year-on-year. It said it is expected to occupy just 1,000 cities. It accounts for more than half of the region’s total demand. The combined demand forecast for Ahmedabad, Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai and Pune is approximately 40 million square feet (msf), which is approximately 52% of the regional demand.
Mainland China’s four major office cities (Beijing, Shanghai, Guangzhou and Shenzhen) are also expected to continue their gradual recovery, with demand in 2024 expected to reach 18ms from the expected 13ms by the end of this year. ing.
Southeast Asian markets will also contribute to the region’s top-line demand, with Kuala Lumpur and Manila office markets in particular likely to benefit from each country’s expanding economic growth prospects, and Singapore likely to continue to maintain a stable performance. .
Office vacancy rate is expected to rise
Despite improving demand, about half of the 25 markets are projected to see vacancy rates increase between 2023 and 2027. The largest increases in vacancy rates are expected to be in Guangzhou (from 20% in 2023 to about 30% by 2027) and Shenzhen (to about 35%). from 27% in 2023 to 27% by 2027).
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Hyderabad, Kuala Lumpur and Bangkok are also predicted to have vacancy rates of over 25% by 2027. Singapore and Seoul are both expected to maintain vacancy rates below 5%, while Tokyo and Manila are expected to remain below 7% until 2027. Australia’s main market remains stable at around 10%.
“It is interesting to see India come of age and anchor commercial real estate demand in the Asia-Pacific region. Regionally, demand in major cities in China improved year-on-year, with markets such as Sydney, Melbourne and Tokyo also performing well.Singapore showed resilience in demand despite a challenging economic environment.” he said. Mr. Jain, Managing Director, India and Southeast Asia, Head of APAC Tenant Representation.
“Large deals that have been on hold for the past few quarters due to macroeconomic uncertainty are likely to revive in 2024. Overall office absorption is not expected due to hiring growth and increased returns to the office. “change”. Meanwhile, a healthy supply pipeline will help occupiers maintain some rental stability,” he said.
New commercial supply increasesIndia’s Hyderabad and Bengaluru, China’s Shanghai and Shenzhen are all expected to receive more than 55msf of new supply by 2027, an addition of 32% to 66% of existing stocks, with Hyderabad receiving a record 15.6 million msf of new supply by 2027. square feet (msf) is expected. Vietnam’s Shenzhen, Hyderabad and Ho Chi Minh City each expect to welcome more than 50 percent of their existing office inventory in 2024.
In contrast, Brisbane, Jakarta, Seoul and Singapore each have a supply pipeline of less than 10% of existing stocks through 2027, the report added.