Grade A office space in Hong Kong is more than twice as expensive as it is in Shenzhen and Guangzhou, according to DTZ Debenham Tie Leung. Even taking into account the longer rent-free periods being offered by most Hong Kong landlords, research by DTZ indicates that Grade A office space in Shenzhen and Guangzhou is much cheaper. The effective occupancy cost, including effective rent plus outgoings and fit-out costs, for Grade A office in Hong Kong was US$80 per square foot a year while in Shenzhen and Guangzhou it was US$36. DTZ said higher rents in Hong Kong constituted the major difference, amplified by higher management fees and fit-out costs. DTZ executive director for North Asia David Watt said office accommodation in Shenzhen and Guangzhou would be significantly cheaper than in Hong Kong for the foreseeable future, and some companies would be tempted to relocate. However, Hong Kong had a number of competitive advantages for international companies looking to do business in the Pearl River Delta region. Offices in Hong Kong had a better opportunity to attract top quality staff, direct access to international banking and insurance sectors, and a beneficial tax regime, he said. Meanwhile, the construction quality and design for offices in Shenzhen and Guangzhou could not compete with that in Hong Kong. 'Many office buildings that are termed 'Grade A' in Shenzhen and Guangzhou would not qualified for such a description in Hong Kong,' Mr Watt said.