Hong Kong retains title of most expensive place in the world to rent office space
Hong Kong has retained the title of the most expensive place in the world to rent office space in its towering skyscrapers, but the pace of growth has slowed, according to international property consultant Knight Frank.
In its latest Skyscraper Index, based on the second quarter 2015 data, Knight Frank said Hong Kong’s office rent per square foot reached US$255.5 per square foot per annum. It was 67 per cent higher than that of New York City, where rents per sq ft per annum was US$153. Tokyo ranked the third with prime rent of US$125 per sq ft.
‘We are talking about the top notch buildings rents ,” said a spokesperson of Knight Frank’s Hong Kong office.
For overall Grade A office rents in Hong Kong’s prime Central business district, they averaged at US$186 per sq ft.
Knight Frank said Hong Kong also ranked number one in the index in the previous year, with rents of US$250.5 per sq ft per annum.
“Other cities are seeing considerably greater rental growth, reflecting stronger office markets elsewhere in the world,” Knight Frank said in its newly released Global Cities 2016 report.
The growth in London office rents is partly thanks to a buoyant occupier market, which has left the vacancy rate at a 14 year low.
Also, several high profile new tower completions have delivered space to the market capable of setting new benchmark levels for rents, the report said.
Hot on the heels of London is San Francisco, where the office market continues to benefit from the city’s flourishing technology sector. Rental growth for tower buildings exceeded 8 per cent , which is considerably higher than any other US city in the study.
Beijing is the only city posting a drop in rentals among the 21 cities Knight Frank monitors. It fell one per cent in the six months to June to US$67 per sq ft per annum, while Shanghai saw rents up 5.3 per cent.
Limited office availability in Central, the city’s CBD, Hong Kong is becoming increasingly difficult to fulfil multinational companies’ rising demand for business space. With the highest prime office rents across the globe.
Hong Kong creates a major challenge for firms who wish to set up offices there – especially in Central. The CBD2 in Kowloon East will alleviate the shortage of supply, the report said.
In its second-quarter Asia-Pacific Prime Office Rental Index report issued last month, Knight Frank said 11 of the 19 markets tracked experienced rental growth, while three registered no movement and five saw rental declines.
Overall, the index increased 1.2 per cent in the second quarter of the year, as the average vacancy rate dropped by a tenth of a percentage point.
Tokyo saw the highest rental growth in the region, with an annual increase of 17.2 per cent compared with the end of June last year on the back of an uptick in cyclical economic conditions.