HONG KONG, April 26, 2011 /PRNewswire-Asia/ -- Cushman & Wakefield, the world's largest privately owned real estate service firm has released a research report that questions if Hong Kong is pricing itself out of the market. The report states that Hong Kong's Central Business District has been ranked as the world's most expensive office market in 2010, due to strong demand and limited new supply. The average rent of the Prime Office Buildings in Central has climbed over 50% from 2009 to US$20.04 (equivalent to HK$155.90)* per square foot per month. In 2011, sustained economic growth and a shortage of new supply are fuelling more competition for office space and a steep uptrend in rental costs.
* Rent is inclusive of Management Fee & Government Rates
Recognizing the rapidly growing prices and lack of supply, The Hong Kong SAR Government has recently announced significant measures to provide more supply for Grade A office space in Hong Kong in an attempt to keep prices reasonable and maintain the city's competitiveness with other regional financial centers.
Nevertheless, many investors are turning to other central business districts throughout Asia, including Singapore to invest in. Last month, Cushman & Wakefield represented the vendor and sold one of Singapore CBD's prime office and retail landmarks, Capital Square, for US$715 million (equivalent to HK$5.563 billion) - the highest price achieved for a sale of a single property in Asia Pacific (excluding Japan) this year.
Purchased by a joint venture between Alpha Investment Partners and NTUC Income, Capital Square achieved an average price per sq ft of approximately US$1,843 (equivalent to HK$14,339), a record price for Singapore's CBD office market in 2011. Capital Square is in fact the 2nd largest broker-led sale globally this year and the highest capital value per square foot of building achieved globally this year for an A grade building. This record sale in Asia reflects the growing demand in commercial property from investors for Asia.
Looking at Hong Kong, with the limited supply in prime commercial space, many global enterprises and investors are also looking at Grade B offices with rents expected to rise even higher this year. The average rent for Prime Office Buildings per square foot per month in Hong Kong's CBD has reached around US$19.15 (equivalent to HK$149)# per sq ft per month in the first quarter of this year while similar locations in Singapore and Shanghai are averaging one third of that price, at around US$ 6.30 (equivalent to HK$49) per sq ft per month.
# Rent is exclusive of Management Fee and Government Rates
John Stinson, Managing Director, Capital Markets, Asia Pacific, Cushman & Wakefield says "There is growing demand for top-tier office buildings within Asia, especially in Singapore and Hong Kong, regions that have become prominent destinations for global institutions. Rental growth in in Hong Kong's CBD Grade A office space is expected to rise by another 20 - 25% this year".
With very limited new supply, Hong Kong is set to have the steepest increase in office rents over the next two years while other regional locations are expected to catch up in 2012.
About Cushman & Wakefield
Cushman & Wakefield is the world's largest privately-held commercial real estate services firm. Founded in 1917, it has 234 offices in 61 countries and more than 13,000 employees. The firm represents a diverse customer base ranging from small businesses to Fortune 500 companies. It offers a complete range of services within five primary disciplines: Transaction Services, including tenant and landlord representation in office, industrial and retail real estate; Capital Markets, including property sales, investment management, investment banking, debt and equity financing; Client Solutions, including integrated real estate strategies for large corporations and property owners, Consulting Services, including business and real estate consulting; and Valuation & Advisory, including appraisals, highest and best use analysis, dispute resolution and litigation support, along with specialized expertise in various industry sectors. A recognized leader in global real estate research, the firm publishes a broad array of proprietary reports available on its online Knowledge Center at www.cushmanwakefield.com
