After hike in rents, Bangkok offices still cheapest in Asia-Pacific

Hong Kong’s Central district remained the highest-priced market in the world for the third straight year, with three other Asian markets including Hong Kong-West Kowloon and Tokyo in the top five – reflecting the growing dominance of the region in the global economic scene. 

Out of the 127 cities surveyed, Bangkok was ranked 115th, with rent of Bt842 per square metre per month. It is 12 positions below Manila and 69 below Jakarta, becoming the cheapest in the Asia-Pacific region. 

“Bangkok office rents increased for both grade A and grade B offices in CBD and non-CBD areas,” Nithipat Tongpun, executive director of office services at CB Richard Ellis Thailand, said yesterday. “The total amount of completed office space is 8.1 million square metres and the total take-up in the first quarter of 2013 was 35,000sqm. 

Around 500,000sqm of space is expected to be completed in all areas over the next three years. Almost half of this space will be owner-occupied and there will be only two new CBD grade A buildings. Rents for prime buildings in Bangkok are going to continue to rise.” 

Hong Kong Central’s overall occupancy costs Bt6,539 per square metre per month. Beijing’s Finance Street (Bt5,422), Beijing’s Jianguomen CBD (Bt5, 200) and New Delhi’s Connaught Place CBD (Bt4,974) rounded out the top five. New York’s Midtown Manhattan (10th) returned to the top 10 markets for the first time since early last year, joined by Moscow (seventh) and London’s City (ninth). 

Globally, occupancy costs rose by a scant 1.4 per cent on a year-over-year basis as modest growth in the Americas and Asia-Pacific was partly offset by a slight decrease in recessionary Europe. However, the modest global average uptick masked significant increases in markets such as Jakarta, which posted an increase of 38.9 per cent, and suburban Houston, Texas, with 21.2 per cent. 

“While the pace of occupancy-cost growth globally has slowed, limited supply of prime space in key core business centres has fuelled continuous upward movement of occupancy costs,” said Raymond Torto, CBRE’s global chief economist. “The most expensive office markets often attract the regional headquarters of large multinational firms that require a prime location in a prestigious building with access to major global and regional transit routes.” 

CBRE tracks occupancy costs for prime office space in 127 markets around the globe. Of the top 50 “most expensive” markets, 21 are in the Asia-Pacific region, 18 are in EMEA (Europe, Middle East and Africa) and 11 in the Americas.

In Asia-Pacific, Hong Kong Central’s position as the most expensive office market continues to be bolstered by its status as a leading global financial centre. Although financial institutions have become more cost-sensitive, with some considering relocating to less expensive space outside the CBD, high-quality and premium space is still sought after, especially by mainland Chinese firms that are increasingly setting up their offices in Hong Kong Central in prestigious buildings. 

Asia also had the markets with both the sharpest annual increase and decrease among the markets tracked. Jakarta’s 38.9-per-cent increase to Bt1,737 per square metre was driven by a substantial recovery in domestic demand in the wake of Indonesian sovereign debt’s return to investment-grade status, which energised leveraged investment initiatives and drove up demand for prime office space across the nation’s capital. 

Singapore experienced the largest annual decrease worldwide (16.3 per cent) due, in part, to increases in both new supply and the availability of lower-priced secondary space. The bulk of the rental decline occurred early last year, with only minimal rental corrections in the second half of last year and in the first quarter of this year.

 

 

10 most expensive markets

 

Rank    Market Occupancy cost 

(Bt per square metre per month)

1. Hong Kong (Central) 6,539

2. London – Central (West End) 6,187

3. Beijing (Finance Street) 5,422

4. Beijing (CBD) 5,200

5. New Delhi (Connaught Place - CBD) 4,974

6. Hong Kong (West Kowloon) 4,834

7. Moscow 4,588

8. Tokyo (Marunouchi/Otemachi) 4,480

9. London – Central (City) 3,695

10. New York (Midtown Manhattan) 3,354

Source: CBRE Global Research and Consulting