COMMERCIAL PROPERTY | Staff Reporter, Hong Kong

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

Occupancy costs per sqft are higher than London and New York at $2,505.

Hong Kong’s Central has once again beaten the cosmopolitan jungles of London, New York and Paris as the world’s most expensive prime office market for the third year in a row, according to real estate consultant CBRE.

Also read: Hong Kong offices still the priciest in the world

Prime office occupancy costs, which include rent, local taxes and service charge, in Central clock in at a whopping $2,405 (US$306.57) per sqft annually as of Q1, far beyond London’s West End at $1,843 (US$235.01) and Beijing’s Finance Street at $1,576 (US$200.91).

Kowloon also sealed its spot in the top ten after scoring fourth spot at US$189.56. Beijing CBD, Midtown and Midtown-South Manhattan, Tokyo, New Delhi and London complete the top ten.

Banking and finance are the key drivers of Central leasing demand as Mainland firms line up to the nearby SAR for their prime office needs offsetting the intensified exits of companies pulling out of the CBD amidst staggering rental rates. 

Also read: Hong Kong East and Wanchai vacancy rates tighten in March amidst relentless tenant decentralisation

Companies are moving out of Central in droves with multinational heavyweights Goldman Sachs being the latest to pull out as grade A office rents continue to trend even higher in the traditional business district, according to CBRE Hong Kong market view.

Occupancy costs in APAC rose at a slower pace than their counterparts at the Americas after hitting 1.7% versus 3.2%. Occupancy costs in the Europe, Middle East and Africa market also rose 2%.

Globally, the cost of prime office space rose 2.4% YoY in Q1 buoyed by demand from finance, technology and e-commerce tenants. “We expect global office-occupancy costs to increase by approximately 2 percent in the year ahead,” CBRE Global Chief Economist Richard Barkham said in a report.

Photo from Edwin Leong, CC BY-SA 2.0

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