APAC Cities Secure Spots in Global Top 10 for Prime Office Costs in Q4 2024
Three major cities in the Asia-Pacific region have secured their positions among the world’s top 10 most expensive prime office locations in the fourth quarter of 2024, according to Savills’ latest Prime Office Costs report. The cities ranked second, fifth, and sixth globally, highlighting the continued demand for premium office space in the region.
Global Prime Office Market Trends
The report reveals a 0.3% increase in prime office rents and a 0.2% rise in fit-out costs in Q4 2024. Average net effective costs showed a slight 0.1% increase, marking a steady 1.9% growth for the year.
Singapore secured the sixth spot in the rankings, following London’s West End, Hong Kong, and New York’s Midtown as the top three most expensive markets. Singapore’s prime office costs rose by 0.5%, reflecting tight supply and higher fit-out expenses due to rising labor costs. Tokyo, ranking fifth, experienced a 0.3% increase in the ultra-prime segment, indicating strong demand across the premium office market.
Asia-Pacific Market Dynamics
Despite strong performances in Singapore and Tokyo, the broader Asia-Pacific region witnessed a 1% decline in net effective costs in Q4 2024. China’s prime office sector faced a notable 2.6% decrease, driven by muted economic confidence. Meanwhile, Sydney and Melbourne saw cost growth of 1.7% and 1.6%, respectively, fueled by reduced landlord incentives and rental increases.
Alan Cheong, Executive Director of Research & Consultancy at Savills Singapore, noted that “the rise in Singapore’s office costs continued in 2024 due to limited Grade A office supply and higher fit-out costs.” This trend underscores the resilience of premium office spaces despite global economic fluctuations.
Global Office Market Highlights
In other regions, Dubai and Los Angeles recorded significant net effective cost increases of 7% and 5%, respectively, driven by strong demand and constrained supply. The EMEA region saw a 0.7% rise in net effective costs, with Dubai leading due to surging rental rates. North America experienced similar growth, with Los Angeles’ Century City benefiting from increased leasing activity.
Sectoral Shifts and Future Outlook
Finance overtook tech as the dominant sector in global office deals in H2 2024, contributing to an 18% rise in overall leasing activity compared to the first half of the year. Additionally, 54% of major office deals involved new leases or expansions, reflecting occupiers’ confidence in the premium office market.
Ashley Swan, Executive Director of Commercial & Industrial at Savills Singapore, pointed out that “many companies are upgrading their office premises to support return-to-office and sustainability initiatives, leading to strong demand in prime office buildings.”
Looking ahead, Rick Schuham, CEO of Global Occupier Services at Savills, expects continued growth in rent and leasing volumes in 2025 as businesses prioritize ultra-prime office spaces. Meanwhile, Sarah Brooks, Associate Director at Savills World Research, emphasized that economic uncertainties and evolving workplace behaviors will continue shaping the prime office market in the coming years.
Final Thoughts
With Asia-Pacific cities continuing to command high office costs, the region remains a key player in the global commercial real estate landscape. As businesses navigate economic shifts and evolving workplace trends, the demand for prime office space is expected to persist, reinforcing the importance of strategic office location choices in 2025 and beyond.
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