Hong Kong pips London West End as most expensive office location
GLOBAL occupancy costs are set to rise in 2011, with the Asia-Pacific leading the way. After Bengaluru and Hong Kong, Singapore is expected to show the third-highest increase in global office occupancy costs over the next five years.
The projections come from DTZ's latest Global Occupancy Costs: Offices report, published yesterday. The annual report is based on a survey that assesses the main components of occupancy costs in 121 business districts in 47 countries and territories across the globe, ranking each location based on annual costs per workstation in US dollars. It includes rents and outgoings, such as maintenance costs and property tax.
While global average occupancy costs are projected to show fairly moderate growth of 2.5 per cent per annum till 2015, regionally, the Asia-Pacific is forecast to have the strongest average annual growth at 3.7 per cent.
Kate Medlicott, associate director, DTZ forecasting and strategy research, and co-author of the report, said: 'The biggest increase in costs globally from 2011 to 2015 will be seen in the southern Indian IT centre of Bengaluru, Hong Kong, Singapore, Beijing and Chennai, underpinned by solid rental growth.
'However, the growth in costs of Bengaluru and Chennai is from a very low base and these markets will continue to offer value to occupiers.'
In DTZ's world ranking, Hong Kong overtook London's West End to emerge as the most expensive office location per workstation in 2010, outpacing Tokyo, Paris and New York.
Regionally, Singapore moved from No 8 in 2010 to No 6 in 2011 in the Asia-Pacific, as demand rebounded strongly with economic growth.
Total occupancy costs per workstation also rose 14 per cent in 2010. Due to appreciation of the Singapore dollar, the increase in occupancy costs for 2010 was a greater 24 per cent based on US dollar terms.
Singapore's prime office occupancy costs are forecast to grow by 6.43 per cent annually from 2011 till 2015.
Commenting on the survey's findings, Chua Chor Hoon, head of South-east Asia research, said: 'Like Hong Kong, Singapore's office market is also volatile as demand surges and ebbs in tandem with economic activity.'
She also noted that 'prime office occupancy cost in Singapore last year rose by a smaller percentage compared to Hong Kong as the increase in demand is being met by new supply coming from Marina Bay and the rest of the CBD.'
With prime office occupancy costs in Singapore being less than half of those in Hong Kong, Ms Chua is confident that Singapore will stay competitive as multinational corporations choose between Singapore and Hong Kong to establish a headquarters in the region.
Source: Business Times
