CBRE: Hong Kong world's most expensive office market

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 $248.83 per ft² This topped London's West End, which, reported average occupancy costs of US $220.15 ft². Tokyo was the third most expensive market, followed by Beijing's Jianguomen (CBD) and Moscow.

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.

Warsaw fell to the 64th position with the total occupancy costs in the prime properties at €440/m²/annum. In the previous ranking, Warsaw was at the 50th place in 2010 and 45th in 2009.

Joanna Mroczek, Director of Consultancy & Research in CBRE Poland, commented: "Such a position does not mean the rental decrease. Oppositely, within the last 12 months the occupancy costs in the prime office buildings increased in Warsaw by 3%. However, in comparison to the other locations, the growth in Poland is much more moderate, which is very favorable for both tenants and investors, who know what can be expected from the market.

"Currently the average rents have stabilized. The large amount of the space under construction and the tough competition among developers limit the possibilities of a sudden increase. On the other hand, the strong office demand still heats the market. This relates mostly to the non-central locations.

"The highest rates are registered in the buildings located within the central business district, where the pipeline stock is continuously limited. The zone is under the rental upward pressure, generated by a strong demand for the most prestigious buildings, registered even despite the uncertain economic environment."

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."

Source: CBRE

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