Beijing, Hong Kong slip in office rent rankings
By Cherry Cao |
March 19, 2013, Tuesday
|
Print Edition
Print Edition
LONDON has regained its world's most expensive office market crown from Hong Kong, according to a new report by Cushman & Wakefield.
Meanwhile, Beijing has dropped one place in the top 10 rankings after stagnant rental growth last year, said the real estate brokers and consultants.
London's West End - where office rents climbed 2 percent annually amid a scarcity of quality space - leapfroged Hong Kong's Central Business District to take top spot for the first time since 2008.
"We saw office demand in the Greater Central area of Hong Kong experience a slowdown, resulting in a sizable rental decline," said John Siu, executive director of Cushman & Wakefield Hong Kong.
"Demand fell because of the restructuring among banking and financial institutions which led to office space reduction.
"For 2013, rents will continue to experience some downward pressure due to slightly elevated availability but they may begin to recover in early 2014," predicted Siu.
Beijing, which registered previously two years of massive prime rental growth, dropped one place to 7th in the global ranking as rents remained unchanged last year. Surplus space in non-core areas has provided a number of alternatives in the city.
"Major cities in China, particularly Beijing, saw sharp increase in rents in 2011 and then stabilized in 2012 as sluggish global economy combined with a slowdown of Chinese economic growth jointly led to a fall in demand for office space," said Andy Zhang, managing director of Cushman & Wakefield China.
"For Beijing, its ranking drop will probably increase its competitiveness in the region."
Globally, the office market witnessed prime rents rise by 3 percent in 2012, largely fuelled by the impressive levels of growth in South America - particularly Brazil and Colombia.
The Zona Sul area of Rio de Janeiro, for instance, has climbed from the 8th to 3rd most expensive office locations in the world, following a 43 percent year-on-year rental increase. Meanwhile, Bogota's Andino submarket in Colombia recorded a 65 percent rise in prime rents.
The Americas region as a whole saw the highest rental growth in the world over the year, as prime rents rose by 10 percent. Standout markets in North America included San Francisco in the United States and Calgary in Canada, which registered annual rental growth of 19 percent and 29 percent respectively, amid expansion in the energy and technology sectors.
While prime rents expanded on a global basis, many markets suffered under continuing economic uncertainty and this led to increased occupier caution. The trend of companies proactively trying to reduce office occupancy costs is expected to continue as the overall global economic outlook remains unsure, Cushman & Wakefield predicted.
In Asia Pacific, slower economic growth affected the region, as prime rents rose by only 3 percent over the year.
Despite a clear deceleration in prime rents in both Hong Kong and Tokyo, the two cities ranked 2nd and 5th respectively in the world's most expensive office locations, highlighting their importance as global business centers. Notable gainers in the region included Connaught Place in New Delhi, India, which posted a 25 percent rise in prime rents and Jakarta's CBD in Indonesia where rentals jumped 46 percent in 2012.
Elsewhere around the world, EMEA (Europe, the Middle East and Africa) recorded sluggish rental performance for the third consecutive year with a 0.3 percent annual growth in Western Europe and a 2 percent rise in the Central and Eastern Europe.
Meanwhile, Beijing has dropped one place in the top 10 rankings after stagnant rental growth last year, said the real estate brokers and consultants.
London's West End - where office rents climbed 2 percent annually amid a scarcity of quality space - leapfroged Hong Kong's Central Business District to take top spot for the first time since 2008.
"We saw office demand in the Greater Central area of Hong Kong experience a slowdown, resulting in a sizable rental decline," said John Siu, executive director of Cushman & Wakefield Hong Kong.
"Demand fell because of the restructuring among banking and financial institutions which led to office space reduction.
"For 2013, rents will continue to experience some downward pressure due to slightly elevated availability but they may begin to recover in early 2014," predicted Siu.
Beijing, which registered previously two years of massive prime rental growth, dropped one place to 7th in the global ranking as rents remained unchanged last year. Surplus space in non-core areas has provided a number of alternatives in the city.
"Major cities in China, particularly Beijing, saw sharp increase in rents in 2011 and then stabilized in 2012 as sluggish global economy combined with a slowdown of Chinese economic growth jointly led to a fall in demand for office space," said Andy Zhang, managing director of Cushman & Wakefield China.
"For Beijing, its ranking drop will probably increase its competitiveness in the region."
Globally, the office market witnessed prime rents rise by 3 percent in 2012, largely fuelled by the impressive levels of growth in South America - particularly Brazil and Colombia.
The Zona Sul area of Rio de Janeiro, for instance, has climbed from the 8th to 3rd most expensive office locations in the world, following a 43 percent year-on-year rental increase. Meanwhile, Bogota's Andino submarket in Colombia recorded a 65 percent rise in prime rents.
The Americas region as a whole saw the highest rental growth in the world over the year, as prime rents rose by 10 percent. Standout markets in North America included San Francisco in the United States and Calgary in Canada, which registered annual rental growth of 19 percent and 29 percent respectively, amid expansion in the energy and technology sectors.
While prime rents expanded on a global basis, many markets suffered under continuing economic uncertainty and this led to increased occupier caution. The trend of companies proactively trying to reduce office occupancy costs is expected to continue as the overall global economic outlook remains unsure, Cushman & Wakefield predicted.
In Asia Pacific, slower economic growth affected the region, as prime rents rose by only 3 percent over the year.
Despite a clear deceleration in prime rents in both Hong Kong and Tokyo, the two cities ranked 2nd and 5th respectively in the world's most expensive office locations, highlighting their importance as global business centers. Notable gainers in the region included Connaught Place in New Delhi, India, which posted a 25 percent rise in prime rents and Jakarta's CBD in Indonesia where rentals jumped 46 percent in 2012.
Elsewhere around the world, EMEA (Europe, the Middle East and Africa) recorded sluggish rental performance for the third consecutive year with a 0.3 percent annual growth in Western Europe and a 2 percent rise in the Central and Eastern Europe.
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