Hong Kong — Hong Kong’s premium office space has topped the charts as the world’s most expensive for the second consecutive year, outpacing prices in Midtown New York by 66%, according to property consultancy JLL.
Offices at the top end of the Hong Kong market command an average of $323 per square foot (psf) a year in occupancy costs, which include rent, service charges and government taxes, according to the report released on Wednesday.
In Midtown New York, the cost is $194 psf, while London’s West End is $193 psf.
A separate report published by property consultancy Cushman & Wakefield last week also ranked Hong Kong in the No1 spot for the world’s most expensive prime office space, with an occupancy cost per desk space of $27,432, followed by London’s West End at $22,665.
"For the same cost of accommodating 100 staff in a Hong Kong office, 300 can be accommodated in Toronto, 500 in Madrid and 900 in Mumbai," the report said.
Supply shortages and high demand from mainland Chinese firms help fuel Hong Kong’s premium office rents, but the city also has the world’s steepest rental discounts in noncore business districts, said JLL.
"Yes, central is the most expensive," said JLL Hong Kong’s head of research, Denis Ma, referring to the prime central district. "But if you look a bit further out … it’s 64% cheaper." Office rents in the central business district rose 5.2% in the first 11 months of 2017, Ma said, while the rents on the opposite end of Hong Kong Island edged up 2.6%.
The city’s commercial property and land market has had a run of record-breaking deals in 2017. CK Asset Holdings announced the city’s biggest property deal when it said in November it would sell its majority stake in a 73-storey office tower for HK$40.2bn ($5.14bn). The chairman of CK Asset Holdings is Hong Kong’s richest man, Li Ka-shing.
In May, another major developer, Henderson Land Development, shattered previous records for commercial land sales in terms of price per square foot when it agreed to pay about HK$50,000 psf for a rare commercial site in the heart of the central district.