Office rents are the most expensive in Hong Kong.
Hong Kong’s central office rents have topped the world’s top for four consecutive years. Property consultants Jones Lang LaSalle said that the rental costs (including rents, taxes and service charges) in the district are 60% higher than in New York City (Manhattan) and nearly 75% higher than the West End. The bank also said that the active expansion of mainland enterprises in Hong Kong is the main reason for the high cost of renting in Central. However, the demand has declined since the last quarter, and some companies have turned to non-core areas to find office space with lower rents. It is worth noting that Hong Kong Island East, which has always been regarded as a logistics office by multinational corporations, is gradually becoming the first choice for office locations.
Banking finance industry is a high-end office building
This year, Jones Lang LaSalle’s Premium Office Rent Tracker analyzes the rental data of the highest quality office buildings in prime locations in 61 cities.
In the Asian market, among the top 10 high-end office markets, Chinese cities account for six, including Hong Kong, Beijing, Shenzhen and Shanghai. But as companies seek to save costs, many Chinese cities are also undergoing decentralization. The data shows that the average rental cost of high-end office buildings in Central, Hong Kong is US$338 per square foot, Beijing Financial Street is US$189 per square foot, and Shanghai Pudong District is US$131 per square foot. At the same time, Singapore ranks 14th in 2017 in major cities in Asia and ranks among the top 10.
Jones Lang LaSalle survey shows that the banking and financial services industry is the largest tenant of high-end office buildings in the world, covering major tenants with more than half of the market in 72 markets worldwide. Jeremy Sheldon, managing director of the Asia-Pacific business unit of the bank, said: “The high-value and high-profit businesses of the financial services industry, such as private, corporate and investment banking, are willing to rent high-end office buildings in Beijing, Shanghai, Tokyo and Singapore. The cost is still The key factors in the location of the company, these companies will give priority to the needs of talents and supporting facilities when choosing the next office location. They are interested in high-quality office buildings to attract and retain top talents, which also helps them enhance their brand image."
Central District is still sought after by the two most popular
According to the analysis, tenants of all walks of life are seeking to integrate and optimize their portfolios in their strategic areas, and tend to understand the role of the location of the company in attracting and retaining talent. Central Hong Kong is a typical example. Its superior transportation links, convenient facilities and excellent digital infrastructure are all factors that companies should consider when choosing the next office location.
Ma Anping, head of Hong Kong’s research department at Jones Lang LaSalle, said: “Hong Kong is the financial hub of Asia. Central is still the most important financial district. Due to the low vacancy rate in Central, the rent is moving upwards." He said that Most of the companies have turned their attention to the office market in Hong Kong’s non-traditional core areas. In the third quarter of 2018, more than half of the newly-received office leasing cases were located in non-core areas, with Hong Kong Island East and Kowloon East being the most popular.
Ma Anping added that the total rental cost of Hong Kong Island East is 64% lower than that of Central, so the financial, insurance, real estate and business services industries are gradually shifting to the region, currently accounting for 37% of the total number of tenants. In addition, more and more technology companies and law firms have moved to Hong Kong Island East, such as Ernst & Young and Baker & McKenzie.
Zhou Haoran, senior business director of the Central Plains (Industrial and Commercial) office building department, stressed that the Central District indicator commercial building continued to be sought after and the investment value was stable. A large number of mainland and overseas companies have entered the market, and the core area of Hong Kong Island has been particularly sought after. The rental and sales prices have continued to rise and the investment value has been significant. He pointed out that recently, some owners have seen the market conditions and launched the high-level units of the Bank of America. The intention price is about 40.24 million yuan, equivalent to about 40,000 yuan. Not only that, but in the future, the market will be driven by the Murray Road parking lot, which is invested by Henderson Land (012).