Asia-Pacific’s offshoring market is booming, set to hit $185.1 billion by 2032, driving significant office space demand. With the lowest operating costs and rapid growth in key cities like India and the Philippines, the region leads global offshoring, offering cost-effective, high-quality office solutions.
The Asia-Pacific region is set to redefine the global offshoring landscape. Its market growth is projected to hit $185.1 billion by 2032, marking a compound annual growth rate (CAGR) of 10.2%. This burgeoning growth is expected to catalyse a spike in office space demand, adding 4.7 to 5 million square meters annually over the next three years. Knight Frank’s report on the Asia-Pacific Horizon emphasises the region’s emerging dominance as a prime offshoring destination, driven by favourable economic conditions and strategic market positioning.
Amid global market fluctuations, Asia-Pacific stands out with its robust growth trajectory, outpacing other regions and is projected to expand the global offshoring market to $544.8 billion by 2032. North America remains a strong player, but Asia-Pacific’s accelerated growth rate underscores its strategic importance in offshoring. Tim Armstrong of Knight Frank points to the region’s dynamic growth, highlighting India, the Philippines, Malaysia, and Vietnam as vital offshoring hubs. These countries, he notes, offer a compelling blend of cost-efficiency and quality, presenting nearly 70% lower operating costs compared to the U.S. This cost advantage translates into significant occupancy cost savings, making Asia-Pacific an attractive option for businesses aiming to optimise expenses without compromising on quality.
The global office sector is witnessing a paradigm shift, gravitating towards sustainability, amenities, and flexibility. Asia-Pacific’s premium office spaces, especially those that align with Environmental, Social, and Governance (ESG) standards, are in high demand. The region’s educated, multilingual talent pool further enhances its appeal, positioning it as a frontrunner in the offshoring sector.
Offshoring is not just a business strategy but a transformative force in the region’s office market landscape. Christine Li of Knight Frank acknowledges the pivotal role of offshoring in driving office space demand, especially in the four key markets of India, the Philippines, Malaysia, and Vietnam. These markets have seen a noticeable increase in leasing transactions, with offshoring entities accounting for a significant portion of market activity.
Despite a slight downturn in overall rent and a rise in vacancy rates across the Asia-Pacific office market, corporate occupiers’ strategic prioritisation of offshoring functions has fostered market resilience. This strategic focus supports headcount growth in cost-effective regions and optimises real estate utilisation in more expensive locales. As a result, strategic locations like Vietnam and the Philippines are witnessing a more stable rental environment, while Malaysia and India are experiencing rental strength despite increased vacancies.
In conclusion, the Asia-Pacific region is on track to becoming a global offshoring powerhouse, driven by cost advantages, quality workforce, and strategic market positioning. This growth is reshaping the offshoring industry and significantly influencing the office space market dynamics, heralding a new era of economic and natural estate development in the region.
