COMMERCIAL PROPERTY | Staff Reporter, Hong Kong

Central still the world's priciest office market for fifth consecutive year

Occupancy costs run at $2,665.8 psf per annum.

Central retained the crown as the world's most expensive market for the fifth consecutive year although the rental gap between the island-city and mainland Chinese cities narrowed in the first half of the year, according to JLL’s Premium Office Rent Tracker (PORT) report.

Occupancy costs in Central which include rent, taxes and service run at $2,665.8 per sqft (psf) per annum. New York City’s Midtown came second at $1,662 psf per annum.

Also read: Central is the world's priciest prime office market for third straight year

Beijing’s Finance Street tied with London’s West End in the third spot at $1,528.9. Finance Street’s average increase in occupancy costs of 3.2% outpaced Central’s recorded increase of 0.6%.

Likewise, Shanghai’s Pudong and Beijing’s CBD also outpaced Central, with occupancy costs rising by 1.5% and 3.5%. Pudong broke into the top ten at $1,042.8 psf per annum, inching up from the eleventh spot; whilst Beijing’s CBD jumped from eighth to sixth spot in the global leaderboard with costs at $1,246.7 psf per annum.

Alex Barnes, head of markets at JLL Hong Kong, said, “Whilst Central’s high rents continue to grab headlines, the reality is that there has been minimal transactional activity recorded in this market over the past six months and rents have been held up by incredibly tight vacancy. For landlords, there is simply no need to dramatically reduce rents to fill the remaining pockets of vacancy.”

Also read: Grade A office net absorption falls to 14,500 sqft in April as demand weakens

He added that the increased market uncertainty will push the bulk of activity outside of Central, particularly to where cheaper yet newer supply sits such as Kowloon East, whilst those in the banking and finance and professional services may be attracted to Quarry Bay.

Other cities gracing the top ten are New York City’s Midtown South ($1,427 psf per annum); California’s Silicon Valley ($1,238.8 psf per annum); Tokyo’s Manurouchi ($1,231 psf per annum); and New Delhi’s Connaught Place ($1,160.4 psf per annum).

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