The View | Asia’s office sector is thriving, so where are the investors?

Just a cursory glance at office occupancy rates around the world reveals where the commercial property sector’s problems lie. In the United States, average occupancy rates in 10 leading cities stood at just 52.5 per cent at the beginning of March, according to data from Kastle Systems. In Britain, the average rate was a more worrying 35.9 per cent, the level it has stood at for the last year or so, according to Remit Consulting.

In fact, some office markets in Asia are performing exceptionally well. In India, leasing activity last year reached its second-highest level on record. Meanwhile, rents for grade A buildings in Seoul grew a staggering 15.2 per cent last year, with the vacancy rate in the city standing at a negligible 1.5 per cent at the end of 2023, according to CBRE.

Yet while Asia’s office markets have been less affected by the pandemic-induced shift to hybrid working, investment activity in the sector has fallen sharply. Transaction volumes last year were 52 per cent below their average level in 2020-22. While the decline was not as steep as in the US and Europe, purchases by investors from outside the Asia-Pacific were a staggering 84 per cent below the average level in 2020-22, according to data from MSCI.

Even in South Korea and Singapore – another resilient office market – purchases by cross-border investors were 25 per cent and 50 per cent below the average level for the preceding three years, according to MSCI.