A New Era of Office Buildings in Asia-Pacific
A significant transformation is unfolding across the Asia-Pacific’s office real estate landscape, as revealed in the insightful “New Horizon Outlook 2024 Part 1: Asia-Pacific Tomorrow” report by Knight Frank. This evolution is not just about buildings; it’s about creating spaces that resonate with today’s demand for quality and sustainability. These modern, premium office buildings stand at the forefront of the ‘flight-to-quality’ and ‘flight-to-green’ movements, playing a pivotal role in attracting the brightest minds.
The Forefront Predictions and Rising Trends
The report deftly sketches a trio of core predictions that are set to redefine the commercial property sphere in the upcoming year. It spotlights the growing preference for newer, ESG-certified buildings, the strategic advantage of the region’s rich talent pool, and the distinct emergence of a two-tiered market within the office sector of Asia-Pacific.
Prioritizing ESG-Certified Buildings
Zooming in on the first trend, there’s a clear shift towards constructing office buildings that meet strict Environmental, Social, Governance (ESG) criteria. Christine Li, the head of research for Asia-Pacific and the author of the report, points out, “The less mature office market in Asia-Pacific proves advantageous, enabling the development of state-of-the-art office buildings with modern facilities without the concurrent risk of obsolescence, a preference gaining traction among occupiers in the region.” Keith Ooi, Group Managing Director of Knight Frank Malaysia, echoes this sentiment, underscoring the region’s unique position in developing sustainable, contemporary office buildings.
Also read: AI’s Ascendance: Navigating the Surge of 24 Billion Visits to Top 50 AI Tools
Tapping into a Rich Talent Pool
The second trend underscores the Asia-Pacific’s edge in the global talent race. With a significant urban population and literacy rates around 94%, the region is a magnet for multinational corporations seeking a steady influx of skilled workers, thereby fueling the persistent need for office space.
Emergence of a Divergent Market
The report also uncovers a split within the office sector: while some companies seize the opportunity to shift to newer, ESG-compliant buildings, enhancing employee experiences and boosting their green credentials, others adopt a more cautious approach to portfolio planning in response to economic headwinds. Ms Li highlights, “As the ‘flight to quality’ and ‘flight to green’ trends gain momentum, Asia-Pacific emerges as the optimal choice for workplace transformation due to its up-to-date building technologies and availability of prime, ESG-compliant spaces tailored to company requirements. This starkly contrasts North America and EMEA where over 30% of office buildings, built before 1960, face a high risk of obsolescence, unable to keep pace with evolving tenant preferences in the hybrid work era.”
The Future Outlook for Office Spaces in Asia-Pacific
Tim Armstrong, global head of occupier strategy and solutions, observes, “Although office attendance has now stabilised in the Asia-Pacific region, the rebound in demand for office space has yet to keep up with the strong employment rate. For 2024, while the trends of ‘flight-to-quality’ and ‘flight-to-green’ persist, the enthusiasm for expansion will be restrained. Tenants will continue to approach portfolio planning cautiously due to the difficult macroeconomic conditions. However, it also proves to be a good time to review portfolios to capitalise on softer rents.”
For an in-depth exploration of the evolving office real estate landscape in Asia-Pacific, the complete “Horizons: Asia-Pacific Tomorrow” report is available for download at the provided link.
