Commercial
Sections: Overview Project activity Key considerations
Commercial
Sections: Overview Project activity Key considerations
The commercial market continues to adapt to accommodate changing work patterns and culture, agile workplaces and sustainability initiatives.
There's a strong emphasis on sustainable building practises and achieving government mandated green initiatives.
Scott Halyday Regional Director, Southeast Asia
Overview
The APAC commercial construction sector in Q1 2025 was marked by a shift toward sustainability, with retrofitting and ESG-compliant projects dominating activity.
In Q1 2025, the commercial construction sector in Asia experienced growth, driven by rapid urbanisation, government infrastructure investments, and a strong push towards sustainability. New office construction and retrofitting projects are underway to meet corporate needs, with India, Japan and Singapore leading in terms of construction volume.
Singapore’s market is expected to see resilient office demand, underpinned by steady economic growth, a more stabilised interest rate environment, and higher office attendance in part driven by the Tripartite Guidelines on Flexible Work Arrangement (FWA) effective from December 2024.¹
Across APAC, office construction emphasises sustainable building practices. Singapore’s BCA Green Mark 2021 scheme mandates energy-efficient designs for new builds and retrofits, while Japan’s carbon neutrality target by 2050 drives green construction initiatives.² ³ In the Middle East, the KSA and the UAE are expanding office construction under Vision 2030, as well as economic diversification plans. India’s office construction sector is increasing its focus on green-certified buildings.⁴
India remains the dominant force in APAC’s office market, contributing over 50% of regional demand. This growth is fuelled by the expansion of domestic firms, flexible workspace operators, and the rapidly growing Global Capability Centre (GCC) market, with GCCs driving significant leasing activity in cities like Bengaluru and Hyderabad.
Proposed US tariffs, including a 25% levy on steel and aluminium imports announced in 2025, are unlikely to have directly raised material costs in APAC in Q1 2025 due to limited reliance on US imports. Instead, prices may decrease in the short term, as cheaper materials from China and other countries, redirected from Europe and the US due to tariff pressures, flood the market. However, an indirect impact could emerge from an economic slowdown and inflation triggered by global trade disruptions, potentially dampening investment confidence in steel-reliant markets like Japan, South Korea, Singapore and Australia.
New build vs retrofitting trends
New office construction in APAC varies by market, with some countries more active in terms of significant new commercial builds. Across the region, there is continued emphasis on retrofitting existing stock to meet ESG standards and hybrid work demands.
In India, cities like Bengaluru, Hyderabad and Mumbai are key hubs for new sustainable office tower construction, while Singapore is set to see significant new Grade A office completions in 2025, including projects like IOI Central Boulevard Towers. This is coupled with the increased retrofitting of older buildings.
Japan’s Tokyo market is also active, with ongoing construction of new office projects and energy-efficient retrofits, while Australia’s Sydney and Melbourne markets are seeing the progression of new office builds and retrofitting initiatives to align with net-zero goals. In Malaysia, the Tun Razak Exchange (TRX) project in Kuala Lumpur is nearing completion, adding substantial Grade A office space in the city.
Across APAC, retrofitting is outpacing new builds, with a noted decline in new supply in H2 2024, supported by government incentives like Australia’s Clean Energy Finance Corporation grants and Singapore’s Green Mark Incentive Scheme. The exception to this trend is India.
Sustainability and green incentives
The APAC commercial construction sector in Q1 2025 was marked by a shift toward sustainability, with retrofitting and ESG-compliant projects dominating activity. The region’s pipeline is growing, driven by green initiatives in Japan, Singapore, South Korea and the UAE, alongside urban redevelopment in India and Malaysia. Challenges such as tariff-induced cost increases, labour shortages and regulatory compliance persist, but government incentives—such as Australia’s US$1.2bn green building fund, Singapore’s SG$3bn sustainability grants, and the KSA’s Vision 2030 investments—are expected to sustain momentum through 2025 and beyond.
Project activity
Key considerations
01
Sustainability and ESG compliance
Stricter regulations, such as Japan’s 2050 net-zero pledge and the UAE’s Net Zero by 2050 strategy, are driving investments in green retrofits. In South Korea, Seoul’s Green Building Program mandates energy efficiency upgrades, while India’s IGBC certifications are boosting sustainable office stock. Compliance-associated costs remain a challenge, particularly for older buildings.
02
Economic disparities and investment flows
Uneven economic growth across APAC creates funding disparities. Japan and Australia face stagnant borrowing costs, while India and Malaysia grapple with higher rates, slowing speculative office builds. The KSA and the UAE rely heavily on state-backed funding, which is tied to oil prices.
Cross-border investment is booming, with Singapore and the UAE acting as financial hubs. India’s office market drew US$5bn in foreign capital in 2024, while the KSA’s Vision 2030 projects attract global developers, diversifying funding sources.⁴
03
Workforce dynamics and cultural shifts
South Korea and Japan face challenges with aging workforces, reducing construction labour pools annually, while Australia struggles with post-pandemic migration slowdowns and inflating wages. India’s rapid urbanisation creates oversupply in some markets, pressuring rental yields. Flexible office designs are thriving, with co-working spaces growing in India and Malaysia. Singapore’s hybrid work policies and Taiwan’s tech-driven workplace innovations are redefining office demand, aligning with younger, more mobile workforces.
Sources
- Singapore Office Market Insights, Newmark Group, Inc., March 2025
- Building and Construction Authority, Singapore
- Ministry of the Environment, Japan
- Saudi vision 2030
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