COMMERCIAL PROPERTY | Tim Charlton, Hong Kong

Hong Kong's skyscrapers are the costliest in the world

Costs have reached US$8,000 psf.

The costs of skyscrapers in Hong Kong emerged as the most expensive commercial real estate assets in the world, according to a new analysis from global real estate advisor Knight Frank.

According to Knight Frank’s analysis, which uses rental values as at Q4 2016 and prime yields as a basis, pricing for skyscrapers in Hong Kong has reached US$8,000 per sq ft, over 60 per cent higher than tall buildings in Tokyo, where pricing is estimated at US$4,900 per sq ft versus other global cities like Manhattan/New York at US$3,700 per sq ft and London at US$2,450 per sq ft. Other Asian cities that are priced above US$1,000 per sq ft include Singapore at US$1,900 per sq ft, Taipei at US$1,600 per sq ft and Shanghai at US$1,250 per sq ft.

Pricing is highest in Hong Kong which reflects the world’s highest skyscraper rents, and the lack of available land for future development. Similarly, pricing in major financial centres such as Shanghai, Singapore, Manhattan and London is supported by the high level of demand for space in these buildings.

Head of research for Asia Pacific at Knight Frank Nicholas Holt said capital values of Asia’s tallest towers showed significant divergence at the end of Q4 2016, with Hong Kong sitting at the top and Mumbai at the bottom of the global rankings.

"In Hong Kong, continued strong demand and a lack of new land supply continues to push values higher, while the structure of the Mumbai office market, has tended to see office markets develop outwards rather than upwards," he said.

Hong Kong developer Henderson Land recently paid $3bn for an old five-storey car park, indicating the frenzied state of Hong Kong’s property market. The price was a record lump sum for Hong Kong and a record also per square foot. The sale sets the world’s most expensive city even further apart from its rivals.

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