COMMERCIAL PROPERTY | Staff Reporter, Hong Kong

Central is still the world's priciest prime office market in Q3

Occupancy costs are at $2,641 (US$338) psf.

Hong Kong is still home to the most expensive premium office in the world with Central district holding on to the top spot with occupancy costs of $2,641(US$338) per square feet per year in Q3, according to a study by real estate consultant JLL. 

Occupancy costs are inclusive of rent, taxes, and service charges.

Central's high office costs oustrip that of New York’s Midtown and London’s West End by 60% and 75%, respectively at US$212 and US$195. Even US tech hubs failed to dent Central's dominance as Silicon Valley, San Francisco and Boston all fall short. 

“The high occupancy costs of Hong Kong’s Central are driven by Chinese firms snapping up Grade A office space, although this demand has decreased in the last quarter,” JLL explained. 

Also read: Retail rents in Causeway Bay are the world's most expensive

Staggering costs have prompted a number of firms like Ernst & Young and Baker McKenzie to hunt for alternative office locations like Hong Kong East and Kowloon East. 

In fact, Hong Kong East clinched the 8th spot in the Asia Pacific’s most expensive rents for premium offices as rates hit around $953 (US$122) psf annually. 

“Total occupancy costs in Hong Kong East are 64% lower than in Central whilst Kowloon East is 76% lower than Central,” JLL Hong Kong head of research Dennis Ma noted. "The finance, insurance, real estate and business services sectors have been shifting to Hong Kong East, and now account for about 37% of the tenant base. More tech and legal companies are also relocating from Central to Hong Kong East.”

According to JLL’s study, other Chinese cities also rounded up the priciest occupancy costs in the Asia Pacific, including Shenzhen ($1477 psf), Beijing CBD ($1,195 psf), and Shanghai ($1,023 psf) which placed third, fourth, and seventh, respectively. Meanwhile, Singapore landed the tenth spot with premium office occupancy costs of $844 (US$108) psf.

On the other hand, Kuala Lumpur, Manila and Bangkok are amongst the lower cost office destinations. 

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