Asia-Pacific holds increasing sway in the global commercial real estate market, as Hong Kong’s central business district (CBD) was found to be the world’s most expensive office market with the region also accounting for six of the top 10 most expensive occupier markets worldwide, according to CBRE’s Prime Office Occupancy Costs survey.
Through the survey, 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. Hong Kong’s CBD led the “most expensive” list with overall annual occupancy costs of US$2,678.47 per sq m. This topped London’s West End, which, reported average occupancy costs of US$2,369.75. Tokyo was the third most expensive market, followed by Beijing’s Jianguomen (CBD) and Moscow.
“The most expensive office markets are increasingly located in dynamic business centres across emerging economies as office occupiers diversify their global footprints in these markets to take advantage of rising incomes and the availability of labour,” 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 centres.”
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 Beijing and Guangzhou, China. Beijing’s rise was driven by strong demand, particularly from domestic financial institutions. Significant drops were measured in Hong Kong, Abu Dhabi, Thessaloniki, Dublin and Athens.
Peter Damesick, EMEA Chief Economist, CBRE, added: “Despite the economic headwinds being experienced, twice as many office markets in EMEA recorded increases in office occupancy costs than saw declines over the past year. However, most the increases that did occur in European markets were fairly modest, and the impact of the Eurozone crisis on occupier demand was evident in a further reduction in occupancy costs in several markets in the European periphery, notably Italy, Spain and Greece. From the international occupier’s perspective, cost reductions in these EMEA markets will enhance their competitiveness as office locations.”
Moscow posted the largest gain for the region as its occupier costs grew by 19.1%, driven by strong tenant demand particularly focused on the CBD area where vacancy is relatively low and new development is very limited. Overall, despite economic headwinds, 12 markets in EMEA experienced declines, while 26 markets saw occupancy costs for the year rise. In Central Europe Warsaw is the most expensive market with US$564.26 per sq m. Prague (US$527.23 per sq. m) is the second, Vienna (US$475.13 per sq. m) is the third, followed by Budapest (US429.60 per sq. m), and Bratislava (US$424.65 per sq. m).