A mild displacement of jobs across the Asia-Pacific region as companies expand their use of AI would trim five percentage points off growth in office space demand in the next few years, according to property consultancy CBRE.

In a report released on Thursday it said 3.9 per cent of office jobs were vulnerable to artificial intelligence-driven displacement in developed markets in the region, including Hong Kong, Singapore, Japan, South Korea, Taiwan, Australia and New Zealand.

However, only 1.7 per cent were similarly vulnerable in developing markets including mainland China, India, Indonesia, Malaysia, Philippines, Thailand and Vietnam.

CBRE’s head of Asia-Pacific research, Ada Choi, said in an interview that occupied office space was still projected to grow under a moderate-displacement scenario, “but at a slower pace of 13 per cent” by 2030 – five percentage points less than under the consultancy’s base case, which assumed firms in the region would incorporate AI-related productivity gains without job displacement.

She said the moderate displacement scenario was “a downside sensitivity analysis” as opposed to a prediction of contraction.

“The model also excludes potential upside from new AI-related companies, occupations and business formation,” Choi said. Most Asia-Pacific markets were expected to fall under the moderate displacement assumption, the report said.

But Japan was likely to fall under a slow displacement scenario, with AI adoption limited by organisational and cultural barriers to change, despite technological availability, and workforce adjustment occurring progressively – “with displacement extending well into the 2040s”.

Meanwhile, mainland China could fall under a rapid displacement scenario, “where all occupations identified as highly vulnerable to AI are automated over the shortest modelled time frame”. The report said office employment would continue to expand under such a scenario but only slowly – by a total of 2 per cent between 2025 and 2030.

Such a scenario was “most plausible in markets that combine advanced digital ecosystems, strong AI readiness and supportive policy frameworks designed to accelerate economic transformation”, it added.

AI is unlikely to be the primary driver of office market weakness in Hong KongAda Choi, CBRE“Mainland China, with its strategic focus on technology-led growth and industrial upgrading, exhibits many of the characteristics associated with this trajectory,” the report said. It did not offer a forecast for office space demand in a rapid displacement scenario.

The report said the labour markets in Hong Kong and other developed economies in the region were characterised by a high concentration of office-based employment, relatively high labour costs and strong digital readiness, which made them more sensitive to AI-related displacement.

Office workers accounted for more than 35 per cent of employment in Singapore, Hong Kong and Australia compared with less than 10 per cent in India and Vietnam, it said.

One stabilising factor that could help the region’s office property market weather AI disruption was slowing supply, CBRE said. Forecast annual office completions in 2028 would be equivalent to just 3.2 per cent of the estimated stock in the region next year, and well down on the 5.3 per cent seen before the Covid-19 pandemic.

However, the impact of AI could intensify the market polarisation in Hong Kong that saw top-tier locations such as Central attract more leasing demand, CBRE said.

“AI is unlikely to be the primary driver of office market weakness in Hong Kong,” Choi said. “Rather it is likely to accelerate the divergence between prime and secondary assets that is already evident.”