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SCMP Reporter

HONG KONG, Singapore and Thailand have recorded the fastest-growing office rents in the world during the past six months, according to a survey by international property agency Richard Ellis.

  It said rents in prime locations in Hong Kong leapt by almost 20 per cent in the second half of 1993 on the back of the territory's economic boom.

  As a result, Hong Kong leap-frogged London and Tokyo's Central area to become the world's second-most expensive place to have an office. Tokyo's core business district came top.

  By the end of 1993, companies were paying an average GBP71.46 (about HK$814) per square foot a year to rent a prime office in Hong Kong, including service charges and taxes.

   Space in Tokyo's core business district cost GBP113 per sq ft a year.

  Chris Palmer, managing director of Richard Ellis (Hong Kong), said: ''Japan's economic and financial misfortunes are reflected in an office market which, over the past six months, has seen rents fall by 25 per cent in Tokyo's core business district and by 10 per cent in the adjacent Central area.

  ''Total occupation costs have fallen by similar amounts.''   Property firm Brooke Hillier Parker predicts that Hong Kong will overtake Tokyo's core business district as the most expensive location in the world this year, with Hong Kong office rents putting on perhaps another 30 to 40 per cent while Tokyo rents tumble another 10 per cent or so.

   Richard Ellis research manager Pamela Tam said: ''Given the strength of the Southeast Asian economies, it is perhaps not surprising that their markets are seeing upward rental movement.

  ''This situation is reversed in Europe, with weak office markets due to recession in much of the continent.''   London's West End, where costs have remained stable, has retained its third position, but has overtaken Tokyo Central, which has slipped from second to fourth place.

  Office rental costs have also steadied in the City of London, but there have been some dramatic falls elsewhere in Europe, particularly in Spain.

  Costs in Madrid fell 21 per cent during the second half of 1993, causing it to slip from the world's fifth-most expensive city in July 1992 to 21st in the current survey.

  Elsewhere in Spain, costs tumbled 23 per cent in Barcelona during the second half, while in Berlin they dropped 20 per cent and in Lisbon by 19 per cent.

  New York leapt from 14th to eighth place in the world league, not because costs there have risen but because other business centres around the world have posted far greater falls.

  Richard Ellis said the North American office market as a whole remained generally weak.

  Chicago rental costs have fallen 21 per cent, and Toronto's 17 per cent during the six months.

  Things are no brighter in Australia, where the office market has remained oversupplied.

  Richard Ellis said substantial rent-free periods were being offered in several cities to keep rents the same on paper, but a slide would come.

  David Runciman, Richard Ellis director of overseas investment, said: ''From an investment point of view, property is looking increasingly cheap as the gap between interest rates and prime property yields narrows.

        ''In four cities in the survey - Amsterdam, Brussels, New York and Sydney - the yield on long-term government bonds has now actually fallen below prime office yields, suggesting that some readjustment of property yields is now overdue.'' 



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High rents put Hong Kong on course to catch Tokyo