Six of the Top Ten ‘Most Expensive’ Markets in Asia-Pacific as Emerging Economies Attract Occupiers
OCCUPANCY COSTS INCREASE 3.6% WORLDWIDE FROM YEAR AGO
Los Angeles — July 16, 2012 — Asia-Pacific holds increasing sway in the global commercial real estate market, as Hong Kong-CBD was the world’s most expensive office market and the region accounted for six of the top 10 most expensive markets worldwide, according to CBRE Global Research and Consulting’s semi-annual Prime Office Occupancy Costs survey. Asia-Pacific also accounted for the market with the strongest growth in occupancy costs, as Beijing’s Jianguomen-CBD saw costs rise 49.4% over the past year, CBRE found.
Hong Kong’s CBD led the “most expensive” list with overall occupancy costs of US$248.83 per sq. ft. This topped London’s West End, which, despite a 4.7% year-over-year increase, had total occupancy costs of US$220.15. Tokyo’s was the third most expensive market for office space, followed by Beijing’s Jianguomen (CBD) and Moscow. Other Asia-Pacific markets in the top ten include Beijing-Finance Street (6th), Hong Kong-West Kowloon and New Delhi-Connaught Place, CBD (9th).
CBRE tracks occupancy costs for prime office space in 133 markets around the globe. Of the top 50 ‘most expensive’ markets 19 are in Asia-Pacific, 19 are in EMEA and 12 in the Americas.
“The most expensive office locales are increasingly located in dynamic markets across the emerging economies as office occupiers diversify their global footprints in these markets to take advantage of rising incomes and the availability of labor,” said Dr. Raymond Torto, CBRE’s Global Chief Economist. ”The most expensive office occupier markets also have a diversified economic base; limited, available institutional quality space; strong currencies and are increasingly located in urban centers.”
Occupancy costs increased by an average 3.6% worldwide led by Asia-Pacific at 7.8%, Americas at 5.0%, and EMEA at 0.4%. Occupancy costs increased in 80 markets, decreased in 24, with no change in 29. Among the markets exhibiting the most significant gains were the aforementioned Beijing Jianguomen (CBD) along with Beijing’s Finance Street and Guangzhou, China. Beijing’s rise was driven by strong demand, particularly from domestic financial institutions, combined with lack of available space in Finance Street. Rounding out the top five largest annual increases were San Francisco (Downtown) and San Francisco’s Peninsula market.
While comparisons in dollars are affected by currency exchange rates, annual percent change calculations are based upon occupancy costs in local currency and measurement and not influenced by currency changes. Due to methodology changes in this report, comparisons with figures in previously released reports are not valid.
Asia Pacific had 19 markets ranked in the top 50 most expensive, with three of the top five—Hong Kong-CBD, Tokyo and Beijing’s Jianguomen (CBD)—most expensive markets. According to a CBRE survey of Global Office Occupier Footprints, Hong Kong is the number one location for global office occupiers and this, coupled with scarce land for development, has led to high office rents. The most expensive market in the global ranking from the Pacific Region was Sydney (US$117.88 per sq. ft.), which came in at 15th, on the strength of an 18.9% increase in local currency.
Despite its most-expensive ranking, Hong Kong experienced the largest annual decrease of all 133 markets tracked (-17.2%) as margin pressures on global financial services firms have impacted its Central submarket in the last year given its high exposure to such firms. Some of these firms have consolidated space requirements leading to increased availability in the core CBD. ..
Source: CBRE Global