From our Thought Leader Partner, Savills.

Global occupier sentiment has strengthened, with research showing that prime office rents are expected to rise more firmly in 2026 than in the previous two years. Similar momentum is emerging across Asia Pacific, although the pace of activity differs by market, reflecting the region’s varied dynamics.

Savills’ global network reports that 89% of researchers anticipate rental increases in 2026, and two thirds expect growth above 2%, signalling a firmer outlook than the previous year.

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One of the Fastest Growing Demand Segments: Serviced Office Providers

The strongest rental demand growth in 2026 is forecast to come from serviced and flexible office providers, which are outperforming all other sectors, including technology, life sciences, finance and legal.

This reflects structural shifts in corporate real estate strategies. Flexibility has become essential as global organisations plan across multiple headcount scenarios. Flexible workspace allows rapid scaling without long term lease exposure.

Capex avoidance is another major driver. With fit out inflation and rising construction costs increasing net effective costs worldwide, serviced offices eliminate upfront capital expenditure, accelerate occupancy timelines, and reduce long term liabilities. They offer speed to market for project teams, hybrid work transitions and market entry strategies.

Landlords in major CBDs across APAC, EMEA and North America are increasingly developing self delivered flex suites. This model improves lease up, attracts enterprise tenants, generates service based revenue and supports older Grade B stock.

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ASIA PACIFIC -- A Tale of Two Extremes Has Emerged: Why Some Cities Are Surging While Others Soften

Occupier conditions in 2026 increasingly reflect a barbell market. Some cities face extreme supply tightness while oversupplied markets experience significant softness. This divergence continues to shape how occupiers approach leasing, acquisition and long term planning.

The Tight-End Market: Where Demand is Red Hot

Tokyo – The Tightest Held Market in Region

Tokyo remains one of the tightest office markets globally. Grade A vacancy sits at only 1.0 -1.5% across the central five wards. Rent growth forecasts exceed 5%, supported by strong pre leasing activity and rising construction costs. Incentives are shortening as landlords regain negotiation leverage. With limited large space, occupiers need to lock in options early or pre commit to secure future requirements.

Seoul – Tight but Loosening Slightly

Seoul sits on the tighter side of the barbell, with Grade A vacancy around 4 – 5% heading into 2026. With 210,000 sq m of new CBD supply scheduled for delivery, vacancy may rise slightly. Much of the incoming supply will be owner occupied, which helps maintain solid market fundamentals. In 2025, owner occupier purchases increased as firms sought guaranteed availability in preferred districts. Occupiers are increasingly considering owner occupation for mission critical needs and adopting early design and flex overlays to preserve optionality.

Scaling Capability Hubs in India and Malaysia

India and Malaysia are among the strongest performing prime rental markets, driven by the expansion of global capability centres, deep talent pools and competitive cost bases.

In Mumbai, 2025 recorded significant leasing volumes, tightening vacancy across central submarkets and pushing rents higher in BKC, Andheri Kurla and Lower Parel.

In Kuala Lumpur, demand is shifting toward ESG ready, transit linked Grade A precincts such as TRX, KL Sentral and Bangsar South. Absorption levels are improving, rents are stabilising, and the city’s cost competitiveness is attracting new setups and consolidation activity.

The Soft End of the Market: Where Conditions are Weakest

Mainland China – The Softest Market in Region

Mainland China faces pronounced softness due to oversupply and weakening multinational demand. Tier 1 CBD vacancy now stands at 20 - 30%, with rents 20 - 40% below 2020 peaks. Landlords are using aggressive incentives, flexible lease structures and operational support to stabilise occupancy.

Hong Kong – Signs of Recovery in Prime Areas

Hong Kong - also remains supply heavy, with mid teen Grade A vacancy and cumulative rental declines since 2019. Central’s premium stock continues to outperform. Lower strata pricing has triggered increased end user ownership among occupiers seeking long term cost control and strategic location security. Occupiers in both markets are using landlord incentives to upgrade capex and relocate into newer, high ESG buildings that were previously unaffordable.

Own vs Rent: How Occupiers Strategies Are Shifting at Market Extremes

At Cycle Bottoms: Ownership Becomes a Value Opportunity

Hong Kong and Mainland China have seen increased freehold purchases driven by value opportunities. Depressed pricing reduces opportunity cost, and ownership provides long term cost stability. Hong Kong recorded HKD 32.0 billion in office investment volumes by the end of Q4 2025, with end user acquisitions accounting for 53% of transactions. Purchasers included JD.com (CCB Tower stake), City University (Festival Walk office tower), OCBC (60 Gloucester Road), Alibaba (One Causeway Bay) and the Hong Kong Stock Exchange (One Exchange Square).

At Cycle Peaks: Ownership As a Risk Mitigation Strategy

In supply constrained markets such as Tokyo and Seoul, freehold purchases are driven by necessity rather than value. Scarcity makes contiguous space difficult to secure, encouraging occupiers to pursue owner occupation to guarantee delivery. NH Nonghyup Financial Group’s purchase of the Donuimun D Tower in late 2024 was intended to consolidate affiliate companies within a single location. The acquisition reflects the high valuation of prime office space in Seoul, with this deal ranking second highest among completed Korean office transactions in 2024.