Charting new horizons: 25 trends shaping 2025
Knight Frank's latest Asia-Pacific outlook report, Charting New Horizons: 25 Trends Shaping 2025, delves into the key trends influencing the region's economy, capital markets, office, logistics, and residential sectors. This comprehensive analysis highlights market challenges and opportunities, offering investors in-depth insights, especially on premium office space upgrades, data centre growth, and the rapid expansion of industrial assets in emerging markets.
Knight Frank Asia-Pacific Outlook Report Highlights: Charting New Horizons: 25 Trends Shaping 2025
01 | Office Sector: Premium Redevelopments and ESG Focus
• Nearly Half of Office Redevelopments Target Premium Spaces
In 2024, 45% of all office transactions were designated for redevelopment or renovation, primarily aimed at upgrading specifications. This trend is expected to persist in 2025.
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• Flight-to-Quality Driving Investments
Corporate tenants are increasingly favoring high-quality, ESG-compliant spaces, creating significant opportunities in revitalizing Grade B and older office stock with wellness and sustainability features.
• Investment Growth in Office Sector
Office asset investments in Asia-Pacific grew by 16% in 2024, reaching US$59.5 billion, the fastest-growing asset class and accounting for 37% of all real estate capital.
02 | Data Centre: Leading the Alternative Real Estate Market
• Record Growth
Investments in data centres surged 2.5 times, from US$2.5 billion in 2023 to US$6.3 billion in 2024.
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• Supply-Demand Imbalance
Despite a compound annual growth rate (CAGR) of 19% in live supply (2018-2023), demand continues to outpace availability.
• Key Markets
Malaysia remains the top data centre hub in Knight Frank's SEA-5 Index for 2024, while emerging cities like Chennai, Manila, Melbourne, and Bangkok show strong potential.
03 | Industrial Assets: Emerging Markets Leading Growth
• Record Investments in Emerging Markets
Industrial assets in emerging markets hit a historic high of US$3 billion in 2024, a 50% year-on-year increase, significantly outpacing the 8% growth across the broader Asia-Pacific region.
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• Vietnam's Strategic Position
Vietnam continues to thrive as a top investment destination, benefiting from its proximity to China and robust export growth, with exports rising from US$320 billion in 2019 to US$440 billion in 2023 at a CAGR of 8.2%.
Key Remarks
• Christine Li, Head of Research, Asia-Pacific
"The office sector is evolving into a two-tiered market, driven by demand for ESG-compliant spaces and sustainability regulations."
• Neil Brookes, Global Head of Capital Markets
"The region's real estate market is stabilizing, offering diverse investment opportunities across traditional and alternative assets."
• Fred Fitzalan Howard, Data Centre Lead
"Asia-Pacific's data centre sector presents unmatched investment prospects due to persistent demand-supply gaps."
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The report underscores that despite uncertainties in the economic and market landscape, the Asia-Pacific region remains rich with investment opportunities. By leveraging structural shifts such as sustainability, digitalisation, and market diversification, investors can develop flexible strategies for long-term growth. With the rise of value-add investments and alternative asset classes, the region continues to attract global investors' attention. |
