Despite the strong demand for office space in key Asian cities, Singapore fell four notches to become the 20th most costliest office destination in the world, said CBRE in its latest Global Prime Office Occupancy Costs report.
Notably, occupancy costs in Singapore dropped 13.8 percent to US$94.47 (S$127.5) per sq ft per annum.
Hong Kong (Central) emerged as the world’s most expensive office market with an occupancy cost of US$290.21 (S$391.55) per sq ft per annum, effectively displacing London-Central (West End), which dropped to second place.
Beijing (Finance Street), Beijing (Central Business District) and Hong Kong (West Kowloon) took the third, fourth and fifth spot, respectively.
Also in the top 10 most expensive office markets are Tokyo (Marunouchi/Otemachi), London-Central (City), New York (Midtown Manhattan) and Shanghai (Pudong).
Unaffected by Q1 market jitters, global occupancy cost rose 2.4 percent in the year ending Q1 2016.
“In Asia Pacific, prime office occupancy costs, which reflect the highest-quality properties (typically the top 10 percent of Grade A stock) are growing at a faster pace than average Grade A rents, up 2.7 percent year-over-year compared to only 1.6 percent annual growth for Grade A rents,” it said.
It noted that Hong Kong Central’s double-digit growth in occupancy costs was fueled by an ultra-low vacancy rate due to lack of new development and continued demand for high-quality space in prime locations by mainland Chinese companies.
CBRE’s Global Prime Office Occupancy Costs survey measures and compares office occupancy costs in 126 markets across the world.