Hong Kong’s Central overtakes London’s West End as the world’s most expensive office location
West Kowloon remains in fifth spot
Central in Hong Kong has reclaimed its position as the most expensive office district in the world while West Kowloon remains in the fifth spot, according to CBRE Research’s latest semi-annual survey on global prime office occupancy costs.
The prime occupancy costs – which include rent, local taxes and service charges – in Central topped the list at US$290 per square foot per year, about 10.7 per cent higher than the US$262 in London’s West End, which dropped to second place.
Costs in West Kowloon came to US$179 per square foot per year.
Among the 126 cities surveyed, the two districts in Hong Kong saw the largest and third-largest year-on-year increases in such costs – 19.5 per cent for West Kowloon and 14.2 per cent for Central.
“A lack of space in prime areas in Hong Kong, coupled with stronger demand, particularly from mainland Chinese financial firms, allowed landlords to push rents upwards in the 12-month period to June,” said Rhodri James, executive director for advisory and transactions services, office, at CBRE Hong Kong.
Double-digit rental growth was still evident at the start of the year as firms competed for the best space in grade A buildings in Central, he said.
“However, weaker demand is now causing growth rates to decelerate. We envisage slightly lower rents in some areas next year although Central should prove more resilient, given the lack of developments in the area,” said CBRE.
Other than London’s West End, Central in Hong Kong was the only market in the world where prime occupancy costs exceeded US$200 per square foot per year, the survey found.
CBRE said the double-digit growth in Central’s occupancy costs was a result of an ultra-low vacancy rate due to a lack of new developments in the area and continued demand for high-quality space in prime locations from mainland Chinese companies.
The property consultancy tracks occupancy costs for prime office space in 126 markets around the world.