AI to Reduce Asia Pacific Office Space Demand Growth by 5 Points
A mild displacement of jobs across the Asia Pacific region, as companies expand their use of artificial intelligence, could reduce growth in office space demand by five percentage points over the next few years. This is according to property consultancy CBRE, as detailed in a report by SCMP.
The report indicated that 3.9 per cent of office jobs were vulnerable to AI driven displacement in developed markets across the region. These markets include Hong Kong, Singapore, Japan, South Korea, Taiwan, Australia, and New Zealand.
However, a lower vulnerability was observed in developing markets. Only 1.7 per cent of office jobs in mainland China, India, Indonesia, Malaysia, Philippines, Thailand, and Vietnam were similarly susceptible to AI driven changes.
Ada Choi, CBRE's head of Asia Pacific research, stated that occupied office space is still projected to grow under a moderate displacement scenario. Growth would occur at a slower pace of 13 per cent by 2030, which is five percentage points less than the consultancy's base case. The base case assumed firms in the region would incorporate AI related productivity gains without job displacement.
Ms Choi clarified that the moderate displacement scenario constituted a downside sensitivity analysis, not a prediction of contraction. The model also did not include potential positive outcomes from new AI related companies, occupations, or business formation. Most Asia Pacific markets are expected to align with this moderate displacement assumption.
But Japan is anticipated to experience a slow displacement scenario. AI adoption in Japan is constrained by organisational and cultural resistance to change, despite the availability of the technology. Workforce adjustments are expected to be gradual, with displacement likely continuing well into the 2040s.
Meanwhile, mainland China could face a rapid displacement scenario. Under this condition, all occupations identified as highly vulnerable to AI would automate over the shortest modelled timeframe. Office employment across the Asia Pacific region would still expand, but only slowly, by a total of two per cent by the end of 2030.
Such a rapid scenario is considered most plausible in markets that combine advanced digital ecosystems, strong AI readiness, and policy frameworks designed to accelerate economic transformation. Mainland China, with its strategic focus on technology led growth and industrial upgrading, exhibits many of these characteristics. So the report did not offer a forecast for office space demand under a rapid displacement scenario.
The report noted that labour markets in Hong Kong and other developed economies in the region are characterised by a high concentration of office based employment, relatively high labour costs, and robust digital readiness. These factors make them more sensitive to AI related displacement. Office workers comprise more than 35 per cent of employment in Singapore, Hong Kong, and Australia. This compares to less than 10 per cent in India and Vietnam.
One stabilising factor that might help the region's office property market withstand AI disruption is slowing supply. CBRE reported that forecast annual office completions in 2028 would represent just 3.2 per cent of the estimated stock in the region next year. This figure is significantly lower than the 5.3 per cent observed prior to the Covid 19 pandemic.
However, AI's influence could intensify market polarisation in Hong Kong. Top tier locations, such as Central, may attract more leasing demand. Ms Choi stated that AI is unlikely to be the primary cause of office market weakness in Hong Kong, but rather will likely hasten the divergence already apparent between prime and secondary assets.
AI use could cut Asia Pacific office space demand growth by five percentage points.
Developed markets face higher AI job displacement vulnerability at 3.9 per cent compared to 1.7 per cent in developing markets.
Overall occupied office space is still projected to grow, but at a slower 13 per cent pace by 2030.
Mainland China may see rapid AI job displacement, while Japan is expected to have slow adoption.
Slowing new office supply may offer some stability to the property market.
Source: SCMP
