COMMERCIAL PROPERTY | Staff Reporter, Hong Kong

Hong Kong continues to be the most expensive office location in Asia Pac

Tokyo and Singapore lagged behind as prime office rents in Hong Kong reached US$122.33 per sq ft per year as of the third quarter of 2011.

Colliers International’s Asia Pacific Office Market Overview 3Q 2011 reported:

Sharp deterioration in business conditions, and slower growth momentum in the finance, insurance and real estate (FIRE) sectors’ job vacancies suggested a softening of office leasing demand. The average Grade A office rent stalled in 3Q 2011. As of August 2011, the average Grade A office rent stood at HK$67.91 per sq ft per month, while that of Central declined 1.5% quarter-on-quarter to HK$111.79 per sq ft per month.

Some of the smaller or more cost-sensitive tenants were forced to relocate after receiving landlords’ expensive rental proposals, and looked for alternative office accommodation either away from Central or for lower-cost options in lower-quality offices in fringe Central.

Looking ahead, a relatively higher rent environment, especially in Central, will result in a steady stream of relocations as tenants seek more cost-effective office accommodation. The overall Grade A office rents are set to slow and undergo a downward correction by 8% over the next 12 months.

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