Hong Kong remains the world’s most expensive office market, according to research from CBRE.
The city ranked top of the firm’s new Global Prime Office Rents survey. Indeed, Hong Kong is home to two of the top three most expensive office markets – Hong Kong Central (US$264 per sq. ft. per year) and West Kowloon (US$163 per sq. ft.).
Rounding out the top five were two other Chinese markets – Beijing (Finance Street) (US$179 per sq. ft.) in second and Beijing (Central Business District (CBD)) (US$156 per sq. ft.) in fourth. London’s West (US$146 per sq. ft.) was fifth.
Global prime office rents — which exclude local taxes and service charges for the highest-quality – rose 2.3 per cent compared with a year-earlier for the 12 months ended December 31, 2016.
European markets showed the most consistent growth in prime office rent, mostly due to a lack of supply. Belfast (up 25 percent year-over-year) led the way among the 121 cities surveyed.
Prime rent growth in Asia Pacific averaged 1.8 per cent and was strongest in gateway cities. West Kowloon was the fastest-growing market in Asia with a rent rise of 9.3 per cent due to strong demand from Chinese companies and very tight supply conditions.
“With the strong demand from PRC financial firms for Grade A office space in Central, we expect that the office rents in Central will continue to rise this year,” says Alan Lok, Executive Director, CBRE Hong Kong Advisory & Transaction Services – Office. “While MNC firms are continuing to decentralize, it will take time for the price gap between rents in Central and non-core areas to narrow as the vacancy rate in Central remains at a historical low.”
Of the top 50 most expensive markets around the world, Asia Pacific led the list of most expensive prime office rents with seven of the top 10 most expensive markets — including Tokyo (Marunouchi/Otemachi), Shanghai (Pudong) and New Delhi (Connaught Place – CBD).
Asia home to most expensive office markets
2nd July 2015
Asia is home to the world’s most expensive office locations, according to CBRE, despite London leading the way.
The UK capital’s West End is the highest-priced office market at US$267 per sq. ft. per year. Hong Kong (Central) follows in second place at US$254 per sq. ft. per year, which is the only other market in the world with a prime occupancy cost exceeding US$200 per sq. ft.
Asia continues to account for four of the top five markets, from Beijing (Finance Street) (US$196 per sq. ft.) and Beijing (Central Business District (CBD)) (US$188 per sq. ft.) to New Delhi (Connaught Place –CBD) (US$157 per sq. ft.).
The change in prime office occupancy costs mirrors the gradual recovery of the global economy, notes CBRE: overall global prime office occupancy costs rose 2 per cent year-over-year, with Asia Pacific up 1.4 per cent, reflecting the economic pressures that prevailed in the region over the past year.
“In the Asia Pacific region, occupancy cost trends were mixed, with regional surveys showing stronger hiring intentions among employers in India, Taiwan, New Zealand, the Philippines and Japan while corporate hiring activity remained muted in other locations. India and the Philippines also continued to benefit from growing IT back office services looking for operational and costs efficiency,” comments Henry Chin, Head of Research at CBRE Asia Pacific.
“Throughout Asia, technology firms, business process outsourcing (BPO) firms and non-banking financial institutions are in expansionary mode, stimulating demand for office space. However, we are also seeing diverse occupier activity in the region with less expansionary markets—some occupiers are looking to optimize existing accommodations rather than expand.”