AMID strong and stable demand for office space in top Asian cities such as Hong Kong, Beijing, Tokyo and New Delhi, Singapore has, comparatively speaking, fallen well behind its peers, according to data from global property consultancy CBRE.
In its biannual Global Prime Office Occupancy Costs survey of 126 markets, CBRE reported that the Asia-Pacific region had seven cities in the top 10 list of office markets based on occupancy costs in the first quarter of this year.
Occupancy costs comprise rent, local taxes and service charges, CBRE said.
Its survey found that Hong Kong’s Central district topped the list, with prime occupancy costs at US$290.21 per square foot (psf) per annum, displacing London’s West End and reclaiming the No 1 spot.
London’s West End is No 2 at US$262.29 psf per annum, followed by areas in Beijing – Finance Street at US$188.07 psf per annum and the central business district at US$181.60 psf per annum.
Singapore, meanwhile, was down four spots on the list and ranked as the 20th most expensive city in the world, with prime occupancy costs down 13.8 per cent from the same period a year ago at US$94.47 psf per annum.
Chestertons managing director Donald Han expects prime office occupancy costs in Singapore to fall by a further 10-15 per cent in the next 18 months. He told The Business Times: “The general demand for office space would be about 1.2 million sq ft, yet there will be about 3.6 million sq ft of supply coming to the market. Most of that supply is from the CBD, which traditionally would cater to your financial institutions.
“With the headwinds in the financial and oil and gas sectors, demand for office space has been substantially affected, and being a financial hub, it’s no surprise that rental costs have been decreasing in Singapore.”
Globally, prime office occupancy costs rose 2.4 per cent when compared to figures from Q1 2016, with the Asia-Pacific leading the charge, growing at a faster pace of 2.7 per cent when compared to the global average.
Of the top 50 most expensive office markets, 20 were in the Asia-Pacific, 20 in EMEA (Europe, the Middle East and Africa) and 10 in the Americas.
The survey also revealed that 22 markets moved more than three ranks up year on year, with 41 per cent of them in the Asia-Pacific, indicating that the region “is still growing despite the slowdown in China”.
Said CBRE in its report: “The service sector (the key occupier of prime office space) will show particularly strong growth in Asia as pensions and insurance products gain market share, (and so) occupancy cost growth will continue to trend upwards at a moderate pace.”