Bangkok--15 Jun--CBRE
Bangkok has become one of the cheapest-priced office markets in the world while Hong Kong has been ranked the most expensive office location. Asia continued to dominate the list of the world's most expensive office locations, accounting for seven of the top ten markets worldwide including China, Japan, India, according to CBRE Research's latest semi-annual Global Prime Office Occupancy Costs survey.
Hong Kong's (Central) overall prime occupancy costs of THB 9,140 per sq. m. per month topped the 'most expensive' list, displacing London's West End (THB 8,261), which dropped to second place. Beijing (Finance Street) (THB 5,923), Beijing (Central Business District (CBD)) (THB 5,720) and Hong Kong (West Kowloon) (THB 5,653) rounded out the top five. Tokyo (Marunouchi/Otemachi), New Delhi (Connaught Place - CBD), and Shanghai (Pudong) also featured in the top ten list.
Although the average rent for prime Grade A offices in Bangkok's CBD has increased by 6.6% year-on-year and is among the top 25 annual rental increases, Bangkok has been ranked in 109th position out of 126 cities surveyed, becoming one of the cheapest office markets in the world. The average prime Grade A rent was at THB 959 per sq. m. per month, 9.5 times cheaper than Hong Kong (Central) - the world's priciest market.
"Bangkok office demand has remained strong despite the weak economy and this, combined with the limited amount of new space completed, will continue to push up rents," reported Mr. Nithipat Tongpun, Head of Office Services, CBRE Thailand.
Global prime office occupancy costs—which reflect rent, plus local taxes and service charges for the highest-quality, 'prime' office properties—rose 2.4% year-over-year. In Asia Pacific, prime office occupancy costs are growing at a faster pace than average, up 2.7% year-over-year. A few key Southeast Asian markets registered decreases, including Singapore and Jakarta.
"We expect the global economy to keep growing, and the global service sector, the primary occupier of prime office properties, will continue to expand through periods of volatility," said Dr. Richard Barkham, Global Chief Economist, CBRE. "Since inflation is low, the growth in prime office occupancy costs is significant for both users and investors."
The service sector will show particularly strong growth in Asia as pensions and insurance products gain market share so occupancy cost growth will continue to trend upwards at a moderate pace.
"With low vacancy rates and lack of prime space in Hong Kong, this has allowed landlords to push rents upwards," commented Dr. Henry Chin, Head of Research, CBRE Asia Pacific. "Mainland Chinese financial firms have been seeking prime office space in Hong Kong to support their overseas business expansion and to cater for the clients' needs to manage their capital outside China."
The study also revealed that 22 markets moved more than three rankings upwards with 41% of these in Asia Pacific. The majority of these markets (72%) are not global gateway cities indicating that as rents continue to rise in line with economic growth, cost-conscious companies are seeking space in the less expensive markets. That 41% of the markets moving up are in Asia Pacific indicates that the region is still growing despite the slowdown in China.
Notes
1. The Global Prime Office Occupancy Costs report is a survey of office occupancy costs for prime office space in 126 cities worldwide.
2. The latest survey provides data on office rents and occupancy costs as of March 31, 2016.
3. The Largest Annual Changes rankings are based upon occupancy costs in local currency and measure. The Most Expensive ranking is based upon occupancy costs in US$ per sq. ft. per annum.
4. The figures given in this release refer to occupancy cost. This represents rent, plus local taxes and service charges. The occupation cost figures have also been adjusted to reflect different measurement practices from market to market.
5. Due to methodology changes, comparisons with figures in previously released reports are not valid.
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