Office rental

Hong Kong still second most expensive city for office space

PUBLISHED : Wednesday, 26 February, 2014, 5:24am
UPDATED : Saturday, 18 April, 2015, 5:12pm

Hong Kong remained the world's second most expensive place to lease an office after London's West End last year, as Central rents dropped due to weak demand from financial tenants.

A study by property consultancy DTZ found annual grade-A office occupancy costs in Hong Kong dropped 2.6 per cent to US$21,600 per workstation last year, 17.9 per cent lower than London's West End.

London's occupancy cost edged up 4.9 per cent to US$26,310.

"The gap between the two cities has widened," the study said. "In London, buoyant demand led to an increase in rents, while cost-cutting measures in central Hong Kong drove rents down. Meanwhile, tier-two cities in China and India continue to offer the least expensive office space globally. This reflects rising demand in London and, on the other hand, continued consolidation and decentralisation in Hong Kong."

Hong Kong grade-A office rents in Central dropped 6.4 per cent last year, accumulating a 21 per cent decline after peaking in the second half of 2011, according to a report by Savills.

It said the poor performance due to weak demand from financial tenants was likely to continue this year as the global economic recovery was still uncertain.

Lagos, Nigeria, moved to third position from sixth in 2012, with grade-A office occupancy costs rising 8.9 per cent to US$17,590.

Hong Kong was the only Asia Pacific market in the top 10.

Tokyo dropped to 13th, from 4th in 2012, as rents continued to fall and the yen depreciated.

With occupancy costs below US$3,000 per workstation in 2013, Nanjing and Xian were ranked as the least expensive locations, replacing Cancun, Mexico, and Bangalore, India, in 2012.