Hong Kong has a US$110 fit-out cost per square feet.
Organisations should expect to pay more to redesign or upgrade their workspaces in 2021, despite many trying to decrease capital expenditure (CAPEX) due to the financial impact of the pandemic, according to the latest JLL report.
The report noted that the average fit-out cost rose 4.7% YoY across the region, with labor shortages, health and safety considerations, material availability, and higher delivery costs as the main price drivers.
Hong Kong ranks ninth in Asia Pacific with US$110 fit-out cost per square feet, representing a drop of about 8% in 2020. The pandemic has exacerbated existing challenges in Hong Kong after a period of social tension, which contributed to an overall decline in fit-out costs this year.
“This is because contractors are squeezing their margin to win work this year as many corporates have delayed new CAPEx decision-making. Working practices have been disrupted by the pandemic and many organizations in the city now take time to review their portfolios in order to mitigate the financial impacts the pandemic may cause on their business,” JLL Hong Kong head of project management Antje Petermann said.
She expects the cost of fitting out to be flat in 2021 because contractors will continue to reduce profit margin in order to sustain workload.
Despite overall rising costs in Asia Pacific, JLL believes this will not deter most companies from investing in safe and productive work environments for their employees. The firm mentions that whilst organisations may be re-examining their real estate footprint, workspaces still play an integral role in preserving a company’s corporate culture.
“In many ways, employees have become consumers of the workplace and make choices about where and how they work, so I believe investing in a flexible environment pays back in terms of employee engagement,” JLL Asia Pacific executive managing director Martin Hinge said.
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