Business / Industries

HK and Beijing among priciest office locales

By Wang Ying in Shanghai (China Daily) Updated: 2014-01-09 13:33

HK and Beijing among priciest office localesChina remains home to the world's most expensive office locations, with four appearing on a list of the five most expensive office venues in the world, according to a new global report.

Beijing's Financial Street and Central Business District are the world's third and fourth most expensive office venues, with occupancy costs averaging $197.05 per square foot (1 square foot equals 0.093 square meter) per year and $189.67 per sq ft per year, respectively, while Hong Kong Central and Hong Kong's West Kowloon ranked second ($234.30) and fifth in the top-tier office markets.

London's West End is the most expensive office locality, charging $259.36 per sq ft per year, CBRE Global Research and Consulting's semi-annual Global Prime Office Occupancy Costs survey reported.

Shanghai Pudong ($119.50) and Shanghai Puxi ($111.69) entered the Top 15 list, and Guangzhou ($74.84) ranked 34th, according to the report.

CBRE tracks occupancy costs for prime office space in 126 markets.

Of the top 50 most expensive markets, 20 are in Asia-Pacific, 19 in Emerging Europe, the Middle East and Africa and 11 are in the Americas.

Nick Jones, executive director of office and agency services, for CBRE China, said the ranking of China's prime office markets reflects both the significance of its largest cities as essential locations for major corporations and the lack of supply of prime office space within those markets.

"The appearance of Beijing's Financial Street and Central Business District in the global top five is a case in point, whereby historically high occupancy costs are supported by relatively buoyant domestic and international occupier demand and a continuing lack of available prime offices," Jones noted.

As the nation's financial capital, Shanghai failed to list either its Pudong or Puxi office locations in the top 10.

This is a result of the city's abundant supply and stagnant demand, said Chen Zhongwei, head of research at CBRE China.

According to Chen, average office demand in Shanghai over the past 11 years (from 2003 to 2013) was 570,000 square meters per year, similar to the capital's 550,000 sq m per year, but with a greater supply.

"Shanghai is expected to have up to 1 million sq m of new annual supply in the coming two years, but the supply in the capital will be only 330,000 sq m per year," Chen said.

Take Beijing's Financial Street, for example. The area has seen only two or three new office buildings go up since 2008. The vacancy rate is approaching 0.1 percent, which means there is almost no room for any new demand there, Chen said.

The appreciation of the yuan also should play a positive role in the ranking, especially because rates are calculated in US dollars, added Chen.

China's robust economic growth also has helped its first-tier cities to secure a place in recent rankings for living costs.

Beijing is Asia's second-most expensive location for international assignees, rising from fifth place the previous year, according to the latest cost of living survey by ECA International, a provider of information and technology for the management and assignment of employees.

Globally, Beijing is the 15th most expensive location for expatriates. Shanghai was in 18th position in the global results and fourth in Asia.

China's third-most expensive city, Hong Kong, ranked 28th place globally and eighth in Asia.


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