HONG KONG CENTRAL TAKES TOP SPOT AS WORLD’S HIGHEST PRICE OFFICE MARKET
By Chris Prasad
Results from CBRE Research’s semi-annual Global Prime Office Occupancy Costs Survey show that Hong Kong is now the world’s highest-priced office market, displacing London-Central (West End) which has now dropped to second place.
Furthermore, the survey’s list of most expensive office markets is now dominated by Asian cities, which make up seven out of a list of 10.
Hong Kong Central district’s overall prime occupancy costs of US$290psf (RM1,163.47psf) per annum topped the list, beating out London’s West End at US$262psf (RM1,051.13psf). Beijing’s Finance Street was marked at US$188psf (RM754.25psf), Beijing CBD at US$182psf (RM730.17psf) and Hong Kong’s West Kowloon at US$179psf (RM718psf). Also on the top 10 list were Tokyo’s Marunouchi/Otemachi district, New Delhi (Connaught Place CBD), and Shanghai’s Pudong district.
The report also said global prime office occupancy costs (which reflect rent, plus local taxes and service charges for high-quality, prime office properties) rose 2.4 per cent year-on-year.
In Asia Pacific, prime office occupancy costs are growing at a faster pace than average, up 2.7 per cent year-on-year. However, a few key Southeast Asian markets registered decreases, including Singapore and Jakarta.
“We expect the global economy to keep growing, and the global service sector, the primary occupier of prime office properties, will continue to expand through periods of volatility,” said CBRE’s global chief economist Dr. Richard Barkham.
“Since inflation is low, the growth in prime office occupancy costs is significant for both users and investors,” he added.
The service sector will show particularly strong growth in Asia as pensions and insurance products gain market share. Therefore occupancy cost growth will continue to trend upwards at a moderate pace.
The study found that the Hong Kong markets had the largest and third-largest year-on-year prime occupancy cost increase among the 126 cities surveyed. Hong Kong’s West Kowloon registered a 19.5 per cent increase, while Hong Kong Central registered a 14.2 per cent increase.
Other than London’s West End, Hong Kong Central is the only market in the world with a prime occupancy cost exceeding US$200psf (RM802.39) per annum.
CBRE tracks occupancy costs for prime office space in 126 markets around the globe. Of the top 50 “most expensive” markets, 20 were in Asia Pacific and 10 were in the Americas.