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HK catching up on London for world's priciest offices
November 10, 2010 / 5:13 PM / in 7 years

HK catching up on London for world's priciest offices

* HK CBD rents up 20 pct in 6 mths, London West End up 6 pct

* Edmonton, Canada, and Orlando, U.S., see biggest slumps

By Daryl Loo

LONDON, Nov 10 (Reuters) - Hong Kong’s central business district (CBD), a gateway to China’s booming economy, is fast catching up with London’s West End as the world’s most expensive place to rent an office, a bi-annual survey showed on Wednesday. Occupancy costs in Hong Kong’s CBD jumped 20 percent to $184.21 per square foot per year in the six months to Sept. 30, more than thrice the speed of growth in the West End, to remain the second-costliest market, CB Richard Ellis (CBG.N) said.

Prime offices in the West End, home to the bulk of Europe hedge funds and also swanky embassies, still costs the most to rent per square foot, rising 6 percent to $193.69 in the same period, CBRE said in a statement.

“Major markets in emerging economies feature prominently at the top of the list of most expensive office costs as measured in dollars per square foot,” said Raymond Torto, CBRE’s global chief economist.

“This pattern developed just a few years ago and it is more pronounced today,” he said.

The overall market for office rents remained weak, however, with 99, or 57 percent, of the 175 cities surveyed by CBRE, experiencing a year-on-year decline.

Increased economic activity in the Pacific Rim bolstered office demand, while China’s strengthening yuan currency allowed costs to rise relative to other markets, with other Asian cities, such as Tokyo and Mumbai, in the top ten, CBRE said.

The rise of Brazil’s currency, the real, against the U.S. dollar meant Sao Paolo and Rio de Janeiro are now the ninth and tenth most costly office markets globally.

Even after accounting for currency fluctuations, Hong Kong’s CBD remains the fastest gainer in local currency terms, rising 34 percent year on year, followed by Sao Paulo, Hong Kong citywide, and the City of London financial district, it added.

Offices in midtown New York remain North America’s most expensive, although it ranks just 26th globally after falling by 4.5 percent to $66.59 per square in the year to September.

The biggest annual decline in rents were seen in Edmonton, in Canada, and Orlando, in the United States, which fell by 19.4 percent and 17.8 percent respectively. (Reporting by Daryl Loo; Editing by Andrew Macdonald) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)

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