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Thursday, September 15, 2016, 17:37

HK office rent world's most expensive

By Oswald Chan in Hong Kong

HK office rent world's most expensive
A man walks past an office building, reflecting the city in the Central district of Hong Kong on Aug 31, 2016. (ISSAC LAWRENCE/AFP )

Hong Kong prime office rent is the world’s most expensive and will likely remain the world’s highest in the coming 3 to 5 years, global real estate advisory firm Knight Frank said.

According to Knight Frank’s “Global Cities: the 2017 Report” which examines the market performance of 31 global cities, Hong Kong’s prime office rent stood at $278.5 per square feet per annum, 76 percent higher than the Manhattan business district in New York, which was in the second position.

This is due to the fact that Hong Kong has the lowest prime office space stock compared to major financial centers such as Singapore, Sydney, London and Manhattan in New York.

Knight Frank estimates Hong Kong is likely to face a shortage of office space of around 2 million square feet by 2020.

On the other hand, demand for Hong Kong office space is burgeoning especially from mainland business firms. According to Knight Frank, mainland firms have snapped up office space worth $2.9 billion, accounting for 64 percent of total office investment sales transaction value, in the first half of this year.

"In order to hedge against the risk of further rental rises and yuan currency depreciation, many mainland companies are looking to purchase offices for their own use, including setting up regional headquarters," said David Ji Yanxun, Knight Frank’s head of research for Greater China.

"Hong Kong will retain the highest prime office rents for the foreseeable future due to the large gap with other cities and consistent demand," predicted Thomas Lam Ho-man, Knight Frank’s head of valuation and consultancy.

Lam estimated office rent in Hong Kong’s core business area will hike 5 to 6 percent this year.

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