Rent rises keep Central near top of the world

PUBLISHED : Friday, 05 January, 2007, 12:00am
UPDATED : Friday, 05 January, 2007, 12:00am


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Hong Kong's Central has maintained its position as the most expensive business district in the Asia-Pacific region and the third most expensive in the world, as rents in the office hub continue to rise, according to a survey released yesterday.

Hong Kong's office occupancy costs, including rents and maintenance, increased 27.7 per cent to US$141 per square foot last year, according to the survey by DTZ Debenham Tie Leung.

It ranked Hong Kong behind only London's West End and the British capital's business hub, the City of London, in its list of the world's most expensive cities.

The survey reviewed trends last year in office occupancy costs in 134 prime office locations in 48 countries.

The top 10 most-expensive business districts showed significant increases in office occupancy costs amid global economic growth and a stock market boom, the report found.

Hong Kong and the two London business areas were the only three centres where occupancy costs exceeded US$100 per square foot, DTZ Debenham Tie Leung research department director Alva To Yu-hung said.

Grade A office rents in Central increased 32 per cent last year.

'The Central office market is benefiting from the booming financial markets last year,' Mr To said.

'Financial services sectors and investment banks are willing to pay a premium for prime office space in central business districts.'

David Watt, an executive director of DTZ Debenham Tie Leung, projected the trend would continue this year.

'Grade A office rents in Central will continue to increase by 15 per cent this year because of the lack of new office supply there and strong demand from financial institutions,' Mr Watt said.

However, rents in non-core business areas, including Island East and Tsim Sha Tsui, would be stable as most of the new office supply would come from Quarry Bay and Kowloon East, the company said.

Office rents in Quarry Bay are expected to decrease by 5 per cent this year.

In fringe districts, including Sheung Wan and Kowloon East, they would drop at least 3 per cent next year.

The take-up of office space in business districts was about 1.47 million square feet last year, a decline of 51 per cent compared with 2005.

Mr To said office space take-up this year would be unchanged from last year.