Hong Kong to see 10pc rise in office rents over next five years
Hong Kong will see a 10 per cent increase in prime office rents in the next five years at a rate below the average of other global cities, according to international property consultant Knight Frank.
In a contrast, Singapore is expected to see strong rental growth as the country is seen as a strategic base for global companies to expand into Southeast Asia.
Singapore, which suffered from a 29.1 per cent decline in office rents in the previous five-year cycle, is expected to see a 25 per cent increase in the coming cycle.
“Singapore is increasingly viewed as a strategic launch pad for more global companies to expand into Southeast Asian markets. So its prospects for the office market are positive, in light of anticipated healthy demand from companies looking to set up business or expanding there,” said David Ji, Director, Head of Research & Consultancy at Knight Frank, Greater China.
The fairly modest supply of new prime grade office space over the next few years would sustain prime office rental growth in the Southeast Asian nation, said Ji.
However, Hong Kong office rent is already among the highest in the world .
“So any further drastic growth in the next five years is unlikely and will definitely be milder than others many of which are coming from a lower base,” Ji said.
According to Knight Frank Research, Hong Kong at present ranked highest in the list with annual rentals of US$181.42 per square foot this year.
It was followed by London’s US179.42 per sq ft. and Singapore’s US$98.44 per sq ft.
In its inaugural report on Global Cities next year, Knight Frank estimates the office index which tracks the prime office rents in 15 Global Cities saw an average growth of 19.9 per cent over the next five years. The Index is forecast to rise above its pre-Global Financial Crisis level sometime in mid-next year.
Hong Kong is seen reaping a rise of 10 per cent in prime office rents between this year and 2019, after suffering from a decline of 3.2 per cent in the previous five-year cycle.
The Global Cities Report assesses the future trends in real estate of 15 global cities including Hong Kong, London, New York, Paris, and Singapore among others. It also includes Shanghai, the only mainland city in the study. The property consultant said the report aims to help in planning future business strategy.
The biggest rental growth will be in San Francisco, with a growth of 36.2 per cent. The city saw a growth of 36.7 per cent during the last five years to last year. It is followed by Madrid, Spain with a forecast of 28.7 per cent. New York is estimated to see a rise of 28.2 per cent.