Hong Kong has slipped one place in the global rankings of office occupancy costs to No3 as growth slowed by more than half, according to a study by property consultant firm Cushman & Wakefield.
The city's annual occupancy costs, which include rents and maintenance, rose 34.6 per cent to HK$115.70 per square foot a month last year, compared with 75 per cent growth in 2005 and 109 per cent in 2004.
Tokyo ranked second with occupancy costs at HK$119 per square foot a month.
London's West End remained the most expensive office market with occupancy costs of HK$160.20 per square foot.
The improving economy in Hong Kong and the expansion of finance, insurance and investment firms had driven growth of office rentals in Central, a trend that was likely to continue, said John Siu, the general manager of Cushman & Wakefield's Hong Kong office.
'Although supply is tight in Central, the high rentals are pushing out many price-sensitive companies to more affordable locations,' Mr Siu said.