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Asia Pacific Real Estate Market Outlook 2020

Hear from our experts



Asia Pacific net absorption declined by 19% y-o-y in 2019, mainly due to a sharp decline of 25% y-o-y in China’s tier 1 markets. However, following the U.S. and China’s signing of the trade deal in January this year, business sentiment is expected to gradually improve. CBRE expects this to stimulate a mild recovery in net absorption of up to 5% over the course of the year.

New office set-up is expected to increase in 2020 following China’s opening of the financial sector to wholly-owned foreign institutions. Demand from other sectors will also gradually return to the market as businesses cautiously resume expansion. Occupiers in Tokyo and major Indian markets will leverage ample new supply for flight-to-new-build moves. Leasing activity in Singapore, Hong Kong SAR and Australia will remain weak and dominated by renewals.




Leasing demand from the tech sector is expected to be resilient in 2020. China and India will continue to see robust expansionary and upgrading demand on the back of 5G infrastructure investment and global outsourcing growth, respectively.

FinTech firms and start-ups will continue to lease smaller offices for expansion across the region, particularly in Singapore, Tokyo and Chinese cities. Office requirements among large tech firms are likely to become more diversified, with selected tech giants leasing business park space to house R&D functions or relocating to self-owned properties.

Flexible office providers began to consolidate in 2019 – a trend expected to gain further momentum in 2020 as unprofitable centres downsize, particularly in China. However, some providers will expand cautiously into emerging markets such as India and Southeast Asia, albeit only after careful due diligence.

Large scale expansionary demand from traditional office occupying industries such as finance and professional services will remain limited as most companies keep costs in check. Full decentralisation, agile working and right-shoring will be widely considered by occupiers in these sectors. Areas of demand growth may include foreign banks entering China following the relaxation of foreign ownership regulations. Emerging Southeast Asia also remains a target for overseas financial, insurance and legal firms, supported by the growth of the middle class, structural economic change and favourable policies to boost the development of the finance sector.





More than 67 million sq. ft. NFA of new Grade A office supply is expected to come on stream in Asia Pacific in 2020, a figure likely to drive up regional vacancy up by another 100 bps to 16%.

As in recent years, the bulk of new Grade A supply will be located in China and India, namely Bangalore, Hyderabad, Shanghai, Delhi NCR and Shenzhen, which will comprise around 60% of the total. Elsewhere, the size of Grade A office stock in Tokyo is projected to increase by 10% by year-end, although 90% of new space is already pre-committed. Other major completions are due in Hanoi, where the completion of the city’s first international Grade A office building will increase total Grade A stock in this market by 20%.

New supply in CBD locations will remain limited, with over half of new stock located in decentralised business areas. In some Chinese and Indian markets, this will result in high vacancy in non-core areas but tight availability in prime locations, underlining the diverse supply picture in markets with a high overall Grade A vacancy rate.

All new very large sized schemes (those greater than 1 million sq. ft.) due for completion in 2020 will be in North Asia and Hanoi, with two-thirds of such supply situated in decentralised areas. This structural shift will drive the movement of large-space users seeking higher quality buildings and more efficient floorplates to non-core locations.

Occupier choice in Tokyo, Taipei, Singapore, Sydney and Melbourne will remain constrained by low availability, with the shortage of centrally located Grade A buildings set to be particularly acute. However, tenants’ preference for newer properties may see older Grade A buildings in core locations struggle to secure tenants, even in tightly supplied markets.





Although leasing demand will slightly recover, large new supply will result in weaker overall Grade A rents in Asia Pacific in 2020. One of the few exceptions will be Perth, which can expect to see further steady effective rental growth on the back of falling incentives, which have declined from 52% to 46% towards the end of 2019.

Rents in Tokyo will be resilient given that ample new supply in 2020 is already largely pre-committed, with the market set to remain tight for the next two years. In Singapore and Sydney, rents peaked in 2019 and are now at the turning point. Greater China markets will account for the bulk of the rental decline, with Central district in the Hong Kong SAR expected to see the sharpest fall, although rents in decentralised areas will be more resilient.





2020 will be characterised by a stronger emphasis on agility as occupiers navigate a prolonged but volatile economic growth cycle.

At the asset level, agility will involve changes to the workplace, such as the greater use of multi-purpose and reconfigurable office space, to support flexible working policies. At the portfolio level, the use of flexible office space – such as that provided by coworking and serviced office operators – is now considered one of the preferred alternative solutions for occupiers. Although this sector has begun to consolidate, occupiers will continue to use flexible space as a strategic component of their overall real estate strategy, rather than as a temporary or reactive solution. Corporates will also lease flexible space when entering new markets or to consolidate operations after M&A, which typically involves longer lease terms and larger numbers of desks.

CBRE expects landlords to introduce a wider range of flexible office solutions to cater to occupier requirements for on-demand space in 2020. This will likely involve developers creating their own flexible space brands and partnering with experienced flexible space operators or third-party providers.


With the upward rental cycle in most markets approaching the peak and large new supply on the horizon, now is the opportune time for occupiers to thoroughly assess renewal, relocation or consolidation options.

Occupiers are also advised to perform more intensive assessment of market, political and environmental risks to enhance portfolio resilience. This type of planning was previously conducted primarily for business continuity purposes; to obtain insurance protection; to reallocate headcount for headquarters functions; and/or when planning right-shoring exercises. However, such risks – particularly those related to climate-related loss - are rapidly moving up the agenda as occupiers become more congnisant of the challenges they pose to specific office locations and building features.

With building construction and operations contributing almost 40% of carbon emissions, many leading companies are already factoring Environmental, Social and Governance (ESG) criteria into leasing decisions. Occupiers are advised to ensure they are prepared to comply with existing and upcoming regulatory requirements related to ESG issues. Green and sustainable buildings will gain further popularity and carry a stronger weighting in portfolio allocations.


The increasingly diverse composition of major office occupiers (which now include tech firms, flexible office providers and life science companies); the absence of any compelling factors requiring such tenants to locate themselves in the CBD of a gateway city; and a growing focus on user experience in the workplace has significantly expanded the universe of property types, locations and markets.

At the same time, occupiers are increasingly aware that having one consolidated office in a single market does not enhance portfolio flexibility and also exposes them to concentration risk and longer lease negotiations. Employees are also displaying a stronger desire for shorter commuting times, indicating that the dispersion of several offices across a single market could emerge as a trend.

The war for talent has also spurred companies to consider establishing a presence beyond traditional gateway markets. The likes of Hyderabad and Chengdu are now emerging as tech hubs, supported by the availability of highly educated employees and low real estate costs.

Although decentralisation is not a new trend in mature markets, where rental savings have been a driving force; nor in emerging markets, where a structural shift is now underway, CBRE expects occupiers to display a greater willingness to experiment with leasing space in emerging areas of decentralised locations, particularly for headquarters purposes.

In terms of property type, business parks, corporate campuses and innovation labs are among the formats CBRE expects to gain further traction in 2020. In addition to cost savings, such properties enable occupiers to implement a placemaking approach; introduce hotelisation features; and install the latest technology to enhance employee experience.


APAC Property Market Outlook by Sector

Asia Pacific Real Estate Market Outlook 2020

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Manish Kashyap
Global President, Advisory & Transaction Services
Advisory & Transaction Services
+65 6326 1220
+65 6225 1987
Dr. Henry Chin
Global Head of Investor Thought Leadership
& Head of Research, APAC
+852 2820 8160
+852 2810 0830
Cynthia Chan
Asia Pacific
+852 2820 2839
+852 2810 0830
Liz Hung
Asia Pacific
+852 2820 6557
+852 2810 0830