AI job losses set to rein in office demand in developed Asia-Pacific economies: report

A new report by property consultancy CBRE predicts that AI job losses could reduce office space demand growth in developed Asia-Pacific economies by 5 percentage points in the coming years. The report estimates that 3.9% of office jobs in developed markets such as Hong Kong, Singapore, Japan, South Korea, Taiwan, Australia, and New Zealand are vulnerable to AI displacement.

However, only 1.7% of jobs in developing markets like mainland China, India, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam face similar risks.

CBRE's head of Asia-Pacific research, Ada Choi, said that while occupied office space was projected to grow under a moderate-displacement scenario, the pace would slow to 13% by 2030 - 5 percentage points less than the base case scenario where firms incorporated AI-related productivity gains without job displacement. The moderate displacement scenario is described as a "downside sensitivity analysis" rather than a prediction of contraction.

The report adds that potential upside from new AI-related companies, occupations, and business formation is not included in the model.

Most Asia-Pacific markets were expected to fall under the moderate displacement assumption, while Japan is likely to face a slow displacement scenario due to organisational and cultural barriers to change. Mainland China could face a rapid displacement scenario where all identified occupations are automated within the shortest time frame. Under such a scenario, office employment would still expand but slowly, by a total of 2% between 2025 and 2030.

The report notes that AI is unlikely to be the primary driver of office market weakness in Hong Kong, as the city has a high concentration of office-based employment, relatively high labour costs, and strong digital readiness. Instead, AI is expected to accelerate the divergence between prime and secondary assets in Hong Kong, with top-tier locations attracting more leasing demand.