World’s Most Expensive Office Space Located In Hong Kong
March 14, 2012 - Hong Kong
When it comes to sky-high rents, Hong Kong has long been a city of superlatives. Now the city can lay claim to another - home of the world's most expensive office rents, says the latest industry report.
According to Knight Frank's 2012 review of global real estate markets, Hong Kong's prime office space, which includes the city's bustling Central district, was renting for as much as a monthly HK$1,046 (US$135) per square meter last year, a growth of 28%.
By contrast, growth in London's spiffy West End - formerly the world's most expensive - slowed last year after a rapid 31% climb in 2010, allowing offices in Hong Kong to become the world's priciest.
Also clawing its way up the real estate charts last year was Beijing. Prime office rents in the city soared 46% in 2011, which allowed the city's ranking on the list of the world's most expensive places to rent to rise 29 places to reach 19th place.
Double-digit prime rental growth is forecast this year in both Shanghai and Beijing, says Matthew Colbourne, senior analyst with Knight Frank, noting that vacancy rates in those cities have now dipped below 5%, putting more upward pressure on rental prices.
Hong Kong is a "bellwether" in the global real estate market, says Mr. Colbourne. "It's the one that always seems to react first to volatility in the financial markets," he says, mostly because of its reliance on tenants in the global financial industry.
Despite last year's jump in Hong Kong's real estate prices, Knight Frank forecasts that with demand for office space weakening, office rents will continue to soften this year.
"It's the general nervousness about the world economy right now," says Mr. Colbourne. "Hong Kong was the first market to show recovery in 2009, and it's the first now to show that it's coming down."
It's a tale of two real estate markets, he adds. "In Hong Kong, though rents seem to be declining, mainland China is still on an upward trend."
Likewise in India, both Mumbai and New Delhi's position jumped, with the two cities moving up to rank as the 14th and 20th most expensive cities to rent office space in, respectively.
The U.S. wasn't entirely left out of the office rental growth story: last year, increased demand from the tech sector pushed prime rent in San Francisco up by 24%, Knight Frank reports - double the increase in rents in Manhattan, which clocked a 12% rent increase.
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