Hong Kong office space remains the most expensive in the world due to skyrocketing demand, according to the latest study from CBRE.
The report details a general slowing of the global premium office space markets in Q3, as both Europe and North America look to drag themselves from recession and growth in China recedes.
Financial services – traditionally the most regular and visible occupiers of central office properties – have taken the biggest hit, falling behind T&T companies with regards to the amount of space they occupy for the first time ever.
Hong Kong office space has risen up the ranks to become the world’s most expensive corporate base due to a chronic shortage of land and appropriate business residences. London and Tokyo came second and third respectively, as a result of low vacancy rates and limited overall space.
In October, SOS reported that Hong Kong is projected to be 9m sq ft short of office space by 2020, assuming an annual growth rate of 4% in the business services sector. At the time, CBRE senior managing director for Hong Kong, Macau and Taiwan, Craig Shute, described the situation as “hitting crisis point”.
As restricted supplies of office space begin to have a tangible effect on the region’s economy, the creation of a ‘CBD2’ near Kowloon East is expected to alleviate some pressure through the construction of 8m sq ft of space. However, this falls short by over 50% of what CBRE believe will be required to meet demand by 2020.
Hong Kong’s steep economic trajectory has also seen it rise to become most expensive retail destination on the planet according to the report, as a burgeoning middle class looks to invest their income in commodities.
Ray Torto, global chief economist with CBRE, stated: “Hong Kong and other Asia Pacific markets have benefited from international retailers – particularly fast-fashion, cosmetics, jewellery, watch, and mid-range fashion retailers – aggressively seeking prime locations across the region”.
San Francisco, Jakarta, Indonesia, Seattle and Finance Street in Beijing, China, all saw the most notable upturn in office space value over the past 12 months, showing an increase of 20-37%.
New York’s Midtown dropped to 16th in CBRE’s shortlist of the most valuable office spaces, with rates of $114.30 per sq ft per annum, only just behind Shanghai’s Pudong district.
The report caps a busy week for CBRE, who were appointed by Manchester Airport’s Group to manage the £650m tender process for the Airport City development.