APAC prime office rents rise 0.6% as competition for quality space grows

Vacancy rates remained stable despite almost 1.5m sq ft of new office completions.

Prime office rents across Asia-Pacific rose 0.6% quarter-on-quarter in the second quarter of 2026, as occupiers continued to compete for high-quality, well-connected space despite nearly 1.5 million sq m of new office completions, according to Knight Frank.

The property consultancy said vacancy rates remained broadly stable across the region, with 18 of the 24 markets tracked recording either stable or higher rents. Occupiers are increasingly looking beyond immediate requirements and securing future office capacity earlier, particularly where supply options are expected to become constrained.

Demand remained concentrated in established business districts, while new Grade A developments lifted rental benchmarks in some emerging markets. Knight Frank said companies are also reassessing office requirements as growth plans, talent strategies and operational needs evolve.

Hong Kong recorded the strongest performance among major office markets, with prime rents rising 5.1% quarter-on-quarter and 12.7% year-on-year. Knight Frank attributed the increase to tightening availability of prime space in Central and growing demand from companies seeking to re-establish a presence in core business districts.

In Southeast Asia, Phnom Penh posted the strongest quarterly rental growth, with rents increasing 7.6% as newly completed Grade A projects in prime locations raised market benchmarks.

India continued to record robust office demand, with 9.8 million sq ft leased during Q2. Although below the record levels of 2025, quarterly take-up exceeded the 7 million sq ft of new supply entering the market. Knight Frank said occupiers are increasingly combining conventional long-term leases with flexible workspace to support scalability.

Flex operators accounted for more than 30% of leasing volumes across Bengaluru, Delhi-NCR and Mumbai, ahead of financial firms, according to the consultancy.

Technology companies remained the largest source of leasing demand across Asia-Pacific, while AI-related occupiers are emerging as an increasingly important segment. Knight Frank said these companies are favouring newer, better-connected buildings that can accommodate expansion while supporting talent attraction and retention.

Tim Armstrong, global head of occupier strategies and solutions at Knight Frank, said tightening supply is making it more difficult for occupiers to secure suitable space in the right locations. He said companies are extending planning horizons and considering expansion options, phased commitments and pre-leasing arrangements earlier.

Christine Li, head of research, Asia-Pacific at Knight Frank, said the rise in office rents represented a gradual rebalancing of market fundamentals rather than a broad-based acceleration in demand. She said financial institutions, technology companies and flexible workspace operators continued to support leasing, while supply constraints were increasingly driving rental growth in markets including Hong Kong and several Australian CBDs.

Knight Frank said Chinese mainland markets remained under pressure from elevated vacancies and continued supply additions, despite improving absorption. Looking ahead, the consultancy expects supply constraints and sector-specific expansion to support further rental growth in the second half of 2026, with AI-related office demand providing an additional source of leasing activity.