Hong Kong’s Central and West Kowloon ranked second and fifth respectively in a list of the world’s most expensive office locations, according to CBRE Research’s semi-annual Global Prime Office Occupancy Costs survey.
But it was London’s West End overall prime occupancy costs that topped the list at US$ 273 per sq ft per year. Hong Kong (Central) followed in second place with prime occupancy costs of US$ 269 per sq ft per year. Beijing (Finance Street) at US$ 191 per sq ft per year, Beijing (CBD) at US$ 183 per sq ft per year, and Hong Kong (West Kowloon) at US$ 162 per sq ft per year, rounded out the top five.
Hong Kong (Central) remained the only market in the world – other than London’s West End – with a prime occupancy cost exceeding US$ 200 per sq ft per annum however, there is some evidence that overseas financial services companies are resistant to continued high costs and may be seeking alternatives to a Hong Kong location.
Prime occupancy costs – which reflect rent, plus local taxes and service charges – increased at a 2.4 percent annual pace globally as the world economy continued to gradually improve, and the service sector, a key bellwether for prime office space, entered its fourth year of expansion, driving healthy demand for space in top-quality properties.
Prime occupancy costs in Asia-Pacific increased by 1.9 percent year-over-year from 1.4 percent during Q1 2015 compared with 3.1 percent growth in the Americas and 2.2 percent growth in EMEA.
Dr. Henry Chin, Head of Research, CBRE Asia-Pacific, said, “The TMT sector continues to drive office leasing demand in Asia-Pacific, with healthy appetite for prime quality space in search for talents across the region.
“Domestic financial services companies will also remain the main drivers of leasing activity, although demand will likely moderate after several years of strong growth. Cost saving remains at the top of the occupier agenda with renewals being one of the main themes.”
CBRE tracks occupancy costs for prime office space in 126 markets around the globe. Of the top 50 ’most expensive’ markets, Asia-Pacific had the most number of markets featured, with 20 markets ranked.
