Prime Hong Kong office rents are most expensive globally for fourth straight year, CBRE says

By Daryl / | July 2, 2019 11:51 AM SGT
Prime office rents in Hong Kong's Central district are the most expensive globally for a fourth straight year, with growth in rents across Asia doubling year on year, US commercial real estate services and investment firm CBRE said in a report on Tuesday.
Currently, six of the 10 most expensive office markets are in Asia, and rental growth in the region has almost doubled year on year to 3.3 per cent.
The average annual rent for a prime office in Central, inclusive of taxes and fees, rose to US$322 per square foot, about 45 per cent more than London's West End, which came in second at US$222.7 per square foot. This was the largest difference between any two rankings in the top 10.
"The shortage of new supply and strong demand from financial institutions and mainland [Chinese] companies in the past couple of years are fundamentally" the reasons for the high prices, said John Siu, managing director in Hong Kong at real estate services company Cushman & Wakefield.
Hong Kong's Kowloon district, with an average annual prime office rent of US$208.67, overtook Beijing's Finance Street to come in as the third most expensive office market.
Office rents in Central and Kowloon grew 5.1 per cent and 10.1 per cent, respectively, from the year before, ahead of the Asia-Pacific average growth rate of 3.3 per cent.
"While Central has long been a premier office location, occupiers are now presented with many other cost-effective options in the city," said Alan Lok, executive director at CBRE.
Earlier this year, the Securities and Futures Commission said it would move out of its offices in Central to save costs, and signed an eight-year lease in One Island East in Quarry Bay, part of the Hong Kong East district.
"New office buildings in Kowloon East, such as Two Harbour Square and Quayside [in Kwun Tong], have also attracted global financial services firms such as DBS and JPMorgan to take substantial office spaces," Lok added.
"The vacancy rate in the overall market has yet to go above...