Bricks and Mortar

Hong Kong landlords excel in filling up world's tallest office towers

Mainland will account for 71pc of 'supertall' skyscrapers built over the next five years

PUBLISHED : Tuesday, 23 September, 2014, 3:14am
UPDATED : Tuesday, 23 September, 2014, 3:14am

The number of high-rise office buildings is one criterion for the creation of financial centres as a city needs to provide a first-class environment to house multinational companies.

Hong Kong has 69 tall office buildings with a height of more than 150 metres, ranking it fourth in terms of the number of such skyscrapers, according to CBRE.

New York continues to have the world's largest number of tall office buildings with 152 blocks, followed by 96 in Shanghai and 75 in Tokyo.

As of June this year, Asia was home to 55 per cent of the world's tall office buildings, with the mainland dominating the development pipeline in the "supertall" building category over the next five years.

The mainland will account for 71 per cent of future supply of supertall office buildings - defined as buildings with a height of more than 300 metres - to be completed during the period, with the second-tier cities accounting for 51 per cent.

The development of tall office buildings in Asia began relatively late at the end of the 20th century.

Construction accelerated dramatically in the early 2000s, with completions growing at an average of 40 tall office buildings per year.

In comparison, the United States currently sees the completion of an average of six tall office buildings per year.

The current rate of growth in Asia is faster than it was in the US in the early 1990s, when a construction boom resulted in the completion of about 20 such buildings per year.

The rapid emergence of skyscrapers in Asia means it is critical for landlords to properly understand how to approach securing tenants.

CBRE has found that Hong Kong's supertall buildings filled up their floor space much faster than other cities in the region.

The 412-metre Two International Finance Centre (Two IFC) at Hong Kong MTR Station and the 484-metre International Commerce Centre (ICC) at Kowloon Station managed to achieve more than 90 per cent occupancy within two years of completion.

In the case of Taiwan's 508-metre Taipei 101, it took around four years for the building to reach 70 per cent occupancy, and the 336-metre Keangnam Hanoi Landmark Tower in Hanoi, Vietnam achieved 50 per cent three years after completion.

To speed up leasing of its buildings, landlord Sun Hung Kai Properties has had to resort to offering some bargains. In 2003, it offered rent of close to a tenth of the then average of HK$180 per square foot per month when it began pre-leasing Two IFC, amid fears over the Sars outbreak.

In 2007, SHKP charged tenants at ICC an average of HK$35 per square foot to lure investment banks away from Hong Kong's traditional core business district of Central. Average rents at ICC have now more than doubled to HK$77 per square foot.

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