Employment growth will drive APAC office space demand in 2025

The closing months of 2024 marked a turning point for the global economy. As inflation concerns subsided in many major economies, geopolitics has replaced price pressure as the key risk to the growth outlook in 2025. At the same time, international trade activities will be negatively affected by high uncertainty regarding global tariffs.

In Oxford Economics (OE) December update, it forecasts annual global real GDP growth of around 3.2% growth in 2025 versus 3.1% last year[1]. Growth expectations in Asia Pacific are positive, but diverse, with annual GDP growth of 3.9% forecast for both 2024 and 2025. Meanwhile, the labour market in the region remains generally tight, with unemployment rates back to pre-pandemic levels, ranging between 2-3% in North Asia and Southeast Asia, about 4.0% in China and Australasia, and around 8% in India in 2024[2].

Regionally, the near-term employment outlook has softened slightly. According to the latest survey by Manpower Group in Q1 2025, the net employment outlook for Q1—calculated by subtracting the percentage of employers who anticipate reductions to staffing levels from those who plan to hire—is now 27%, down by 3 percentage points since Q1 2024[3]. India sees the strongest hiring expectations at 40%, while China and Singapore are on par with the regional average. Elsewhere in the region, hiring intension remain soft.

Businesses in the financial and IT industries generally reported the strongest employment outlook among key industry sectors, according to Manpower Group. Technology companies report optimistic hiring plans regionally, with Indian IT employers the most optimistic. The financial services sector, traditionally a key demand driver for the office occupational market, will likely see moderate expansion this year. Financial firms in India continue to report a robust employment outlook. However, other countries generally see more modest employment prospects in the finance, insurance and real estate sectors.

Oxford Economics is forecasting similar trends in white-collar employment growth. Apart from general administrative jobs, office employment growth by industry in 2025 should be led by technology, followed by professional services and financial services. These three industries are expected to add around 2.8 million jobs this year and account for slightly more than one-half of newly added white-collar jobs region-wide.

Figure 1: Asia Pacific employment growth by industry sector (2025F)

Source: Oxford Economics, Q2 2024

Looking ahead, a firm employment outlook, especially for white-collar jobs, bodes well for office occupational demand. Office leasing activity was generally healthy across Asia Pacific last year and is projected to sustain growth, with financial, professional services, and tech firms standing out as key demand sources. A healthy supply pipeline and a growing focus on sustainable workplaces will support the movement of occupiers to higher specification buildings.

That said, downside risks for the global economy and commercial real estate remain noteworthy, as geopolitical and policy risks stay elevated. As such, cost considerations will remain a top priority, with renewal being a preferred route for many occupiers. Moreover, ample supply may also mean that some new office projects may take longer time to fill-up this year, i.e. annual net absorption to new completions ratio of circa 80%.

Figure 2: Grade A office demand versus APAC real GDP growth

Source: Oxford Economics, Q4 2024; calculation by JLL
Note: Annual net absorption divided by annual total completions is a measure of tenant demand

Figure 3: Grade A office demand versus APAC white collar employment growth

Source: Oxford Economics, Q4 2024; calculation by JLL
Note: Annual net absorption divided by annual total completions is a measure of tenant demand

_{[1] GDP, PPP exchange rate, real, USD
[2] Oxford Economics, December 2024
[3] ManpowerGroup Employment Outlook Survey, Asia Pacific Findings, 1Q25}