Hong Kong has emerged top as the most expensive office market not just in Asia but in the world. As one of Singapore’s toughest competitor for international business expanding into Asia-Pacific, will this be good news for Singapore’s commercial real estate sector?
Hong Kong’s Central District 30% more expensive than London’s West End
Compared even to London’s West End, occupancy costs at one of Hong Kong’s priciest areas, the Central District, is a considerable 30% higher.
London’s West End took the second spot after Hong Kong in this most recent survey by CBRE Group. The survey looked at prime office real estate in Q1 and takes into consideration rent, local taxes and service charges.
This is not the first time Hong Kong topped the charts, but the third time in a row. This, however, has boost Hong Kong’s real estate market with increased interest from both domestic and mainland Chinese investors. They have been buying up commercial properties for record-breaking prices in lieu of rental potential.
Global office occupancy costs likely to rise 2% this year
On the global level, prime office rents rose 2.4% in the first quarter. Increments were recorded in all regions – the Americas, Europe, the Middle East and Africa, and Asia-Pacific.
In the first, occupancy costs rose 3.2% with the largest rise in Vancouver. The demand came mostly from finance, technology, and e-commerce tenants. Countries with the quickest gain in office rents included Durban, South Africa, Bangkok, Vancouver, Olso and also Marseille, France.
In the Asia-Pacific regions, many multi-national and international companies often headquarter their regional offices in either Hong Kong or Singapore due to their cosmopolitan qualities, but will this increase in Hong Kong office rents be beneficial to Singapore? Will it, in turn, push more businesses southwards to set-up shop in Southeast Asia or will it simply push rental prices here up?
Related: Office rents rise in prime districts