SINGAPORE – Prime office rents in Asia’s major central business districts are again the world’s most expensive, according to CBRE.
The company’s Global Prime Occupancy Costs report, which tracks the cost of prime leasing office space globally, concluded that six of the world’s 10 most expensive office markets are found in Asia, supported by continued economic growth, employment growth and limited availability of prime space in certain markets.
Despite recent stabilization, Singapore was Asia’s largest gainer in terms of prime office rents, reflecting year-on-year growth of 17.3% for the year ending Q1 2019.
At US$114.28 per sq ft per annum, the city jumped eight spots to rank 14 on the world’s most expensive office market list.
Mr Desmond Sim, Head of Research, Southeast Asia, commented, “The strong year-on-year rental growth reflects Singapore’s robust office market fundamentals, underscored by tightening vacancy and strong absorption. Nonetheless, going forward, the rental growth is expected to ease on the back of economic headwinds as global uncertainties persist.”
For the fourth year, Hong Kong’s Central district retained the top spot as the world’s most expensive market for prime office space (US$322 per sq ft per year) despite more recent evidence of moderating prices – this puts it ahead of the world’s second most expensive office market, London’s West End (US$222.70).
Top 20 Most Expensive Office Markets as of Q1 2019
(US$ per sq ft per annum)
|1||Hong Kong (Central), Hong Kong||US$332.00|
|2||London (West End), UK||US$222.70|
|3||Hong Kong (Kowloon), Hong Kong||US$208.67|
|4||New York (Midtown Manhattan), US||US$196.89|
|5||Beijing (Finance Street), China||US$187.77|
|6||Beijing (CBD), China||US$177.05|
|7||New York (Midtown-South Manhattan), US||US$169.86|
|8||Tokyo (Marunouchi/Otemachi), Japan||US$167.82|
|9||New Delhi (Connaught Place – CBD), India||US$143.97|
|10||London (City), UK||US$139.75|
|11||San Francisco (Downtown), US||US$130.51|
|12||Shanghai (Pudong), China||US$128.51|
|13||San Francisco (Peninsula), US||US$116.28|
|16||Shanghai (Puxi), China||US$109.36|
|17||Boston (Downtown), US||US$106.60|
|18||New York (Downtown Manhattan), US||US$104.66|
|19||Seoul (CBD), South Korea||US$104.53|
|20||Los Angeles (Suburban), US||US$102.05|
Source: CBRE Research, Q1 2019
“Asia Pacific is again recalibrating the global benchmark in prime office rents as demand and supply dynamics continue to prompt prices to hit new heights across core business districts,” said Ada Choi, Head of Occupier Research, Asia Pacific, CBRE.
“As corporations continue to look to attract and retain talent by securing office environments of the highest quality, we expect this momentum to carry over into 2020, despite macroeconomic and geopolitical headwinds.”
In total, of the 122 markets tracked by CBRE, 85 registered cost increases.
The biggest gainer within the top 10 was Midtown Manhattan (US$196.89) in New York City, which climbed to the fourth most expensive market this year from the sixth last year as companies sought prime space in Midtown corridors and the new Hudson Yards mixed-use development.
Over in Asia, in addition to Singapore (17.3%), Hong Kong (Kowloon) (10.1%), Ho Chi Minh City (9.6%) and Hanoi (8.8%) are also featured in the top 20 fastest growing office rental markets.
Meanwhile, notable year-on-year declines in Asia included Jakarta (-7.3%), Shanghai’s Pudong (-0.9%) and Shanghai’s Puxi (-0.5%).
CBRE’s annual Global Prime Office Occupancy Costs report found that average costs for leasing the best office space in each market’s best location increased by 3.6 percent globally in the 12-month period ending 1Q 2019, outpacing the previous year’s gain of 2.4 percent.
Asia Pacific registered a 3.3 percent increase, nearly doubling its growth rate of the prior year.
CBRE defines Prime Office Occupancy Costs as the cost – rent, local taxes and service charges – to occupy the highest-quality office space in each market’s highest-quality location.
Prime real estate costs can be a gauge of a market’s high end – and sometimes of the broader market.
This article is contributed by CBRE.