Taipei – Hong Kong has become the world’s highest-priced office market and Asia continued to dominate the list of the world’s most expensive office locations, accounting for seven of the top ten markets, according to CBRE Research’s latest semi-annual Global Prime Office Occupancy Costs survey.
Hong Kong’s (Central) overall prime occupancy costs of US$290 per sq. ft. per annum topped the ‘most expensive’ list, displacing London’s West End (US$262 per sq. ft.), which dropped to second place. Beijing (Finance Street) (US$188 per sq. ft.), Beijing (Central Business District (CBD)) (US$182 per sq. ft.) and Hong Kong (West Kowloon) (US$179 per sq. ft.) rounded out the top five.
The study found that the Hong Kong markets had the largest and third-largest year-over-year prime occupancy cost increase among the 126 cities surveyed—Hong Kong (West Kowloon) with a 19.5% increase and Hong Kong (Central) with a 14.2% increase, respectively.
Hong Kong’s (Central) double-digit growth in occupancy costs was fueled by two factors: an ultra-low vacancy rate due to lack of new development and continued demand for high-quality space in prime locations by mainland Chinese companies. With low vacancy rates and lack of prime space in Hong Kong, this has allowed landlords to push rents upwards.
| Top 10 Most Expensive Office Markets (In US$ per sq. ft. per annum) | ||
|---|---|---|
| Rank | Market | Occ. Cost |
| 1 | Hong Kong (Central), Hong Kong | 290.21 |
| 2 | London - Central (West End), United Kingdom | 262.29 |
| 3 | Beijing (Finance Street), China | 188.07 |
| 4 | Beijing (CBD), China | 181.60 |
| 5 | Hong Kong (West Kowloon), Hong Kong | 179.49 |
| 6 | Tokyo (Marunouchi/Otemachi), Japan | 160.47 |
| 7 | New Delhi (Connaught Place - CBD), India | 149.71 |
| 8 | London - Central (City), United Kingdom | 145.38 |
| 9 | New York (Midtown Manhattan), U.S. | 136.71 |
| 10 | Shanghai (Pudong), China | 132.78 |
Global prime office occupancy costs—which reflect rent, plus local taxes and service charges for the highest-quality, ‘prime’ office properties—rose 2.4% year-over-year. In Asia Pacific, prime office occupancy costs are growing at a faster pace than average, up 2.7% year-over-year. The service sector will show particularly strong growth in Asia as pensions and insurance products gain market share so occupancy cost growth will continue to trend upwards at a moderate pace.
“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 Dr Richard Barkham, Global Chief Economist, CBRE. “Since inflation is low, the growth in prime office occupancy costs is significant for both users and investors.”
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, 20 were in EMEA and ten were in the Americas.
Notes
1. The Global Prime Office Occupancy Costs report is a survey of office occupancy costs for prime office space in 126 cities worldwide.
2. The latest survey provides data on office rents and occupancy costs as of March 31, 2016.
3. The Largest Annual Changes rankings are based upon occupancy costs in local currency and measure. The Most Expensive ranking is based upon occupancy costs in US$ per sq. ft. per annum.
4. The figures given in this release refer to occupancy cost. This represents rent, plus local taxes and service charges. The occupation cost figures have also been adjusted to reflect different measurement practices from market to market.
5. Due to methodology changes, comparisons with figures in previously released reports are not valid.
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