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Hong Kong faces major shortage of office space within eight years
Source: Agencies |
October 31, 2012, Wednesday
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HONG Kong, home to some of the world's highest commercial property rents, is facing a shortfall of 836,000 square meters of office space by 2020, threatening its status as a leading destination for companies, a report shows.
The study by commercial real estate services firm CBRE comes just days after Hong Kong announced its first residential property tax targeted at overseas buyers as US quantitative easing and record-low interest rates boost the risk of a housing bubble in the financial center.
"Hong Kong is at risk of choking itself at future economic growth and prosperity because it's not delivering the office space to satisfy the demand," said Craig Shute, senior managing director at CBRE.
The forecast shortfall in office space comes even as global companies pull out of traditional core business areas in Hong Kong to cut costs as lingering economic uncertainties take a toll on firms in the world's most expensive office market.
Hong Kong is 11 percent more expensive than London's West End, which ranks second globally, and 33 percent ahead of Tokyo, which is ranked third, according to CBRE.
KPMG, one of the big four accounting firms, recently relocated from the upmarket Prince's Building in Central district to the busy shopping area of Causeway Bay.
Royal Bank of Scotland Group PLC has also moved staff from Cheung Kong Center, the headquarters of Asia's richest man, Li Ka-shing, to less costly properties.
CBRE said Hong Kong's estimated pipeline of 743 square meters of office space by 2020 is less than half of what is forecast to be needed by then based on projected GDP growth.
"There is currently an imbalance, whereby space is mostly available at the top end of the market but demand is now driven by cost-saving practices," CBRE said in the report.
While commercial leasing is now concentrated on lower-cost locations, prices in many of the non-core areas are climbing steadily as demand increases.
"Outside Central, the rents continue to increase and vacancy is extremely low," said Shute. "Vacancy is very tight and this situation is likely to intensify over the coming years."
The study by commercial real estate services firm CBRE comes just days after Hong Kong announced its first residential property tax targeted at overseas buyers as US quantitative easing and record-low interest rates boost the risk of a housing bubble in the financial center.
"Hong Kong is at risk of choking itself at future economic growth and prosperity because it's not delivering the office space to satisfy the demand," said Craig Shute, senior managing director at CBRE.
The forecast shortfall in office space comes even as global companies pull out of traditional core business areas in Hong Kong to cut costs as lingering economic uncertainties take a toll on firms in the world's most expensive office market.
Hong Kong is 11 percent more expensive than London's West End, which ranks second globally, and 33 percent ahead of Tokyo, which is ranked third, according to CBRE.
KPMG, one of the big four accounting firms, recently relocated from the upmarket Prince's Building in Central district to the busy shopping area of Causeway Bay.
Royal Bank of Scotland Group PLC has also moved staff from Cheung Kong Center, the headquarters of Asia's richest man, Li Ka-shing, to less costly properties.
CBRE said Hong Kong's estimated pipeline of 743 square meters of office space by 2020 is less than half of what is forecast to be needed by then based on projected GDP growth.
"There is currently an imbalance, whereby space is mostly available at the top end of the market but demand is now driven by cost-saving practices," CBRE said in the report.
While commercial leasing is now concentrated on lower-cost locations, prices in many of the non-core areas are climbing steadily as demand increases.
"Outside Central, the rents continue to increase and vacancy is extremely low," said Shute. "Vacancy is very tight and this situation is likely to intensify over the coming years."
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