This building in Hong Kong is one of the most expensive office towers in the world.
And in this part of town, demand for space is hot.
With no signs of slowing down, this district, Central tops the list of places with
the most expensive office rent around the world.
Hong Kong has held its spot at the top for three years now.
If you want to rent an office in this area, expect to pay about $306 per square foot, on average.
When it comes to districts with the most expensive office space, Asia is leading the way.
It makes up more than half of the top 10,
and London’s West End is the only non-Asian district in the top five.
Hong Kong's average price for a square foot of office space is around
30% higher than London’s West End at second place,
followed by Beijing’s Finance Street, Hong Kong’s Kowloon and Beijing’s Central Business District.
That’s not stopping the likes of HSBC, J.P. Morgan and hedge funds like Steve Cohen’s Point72
from putting their regional headquarters in Hong Kong’s financial district.
While Central Hong Kong is a convenient place for workers to commute to and clients to visit,
there’s also an element of prestige in having an office address here too.
And that prestige is enticing mainland Chinese companies to move in.
They’re willing to pay top dollar to make a statement.
A slew of Chinese companies have moved in like Chinese conglomerate, HNA Group.
The demand in Hong Kong is driven primarily by banking and finance sectors.
This building is called The Center.
Last year, it was sold for $5.15 billion.
That sale could have heavyweights like Goldman Sachs partially moving out.
It’s reportedly moving its back office to another, cheaper part of Hong Kong.
Which one analyst says could help the firm save 30% on office rent.
All by moving to a space about a 20-minute drive away.
Across from the district of Central, is an area known as Kowloon.
It saw a 12% increase in the cost of office space,
putting it in the fourth most expensive place in the world.
Hong Kong isn’t the only expensive hub in Asia.
This is Financial Street, located on the western part of China’s capital.
The district jumped three places on the most expensive list to the third position.
As China's economy and financial markets open to the world,
it's driving up the cost of both office and residential real estate.
Meanwhile, the nation is seeing a growing demand in big cities
and a booming middle class.
The demand is being driven by finance, technology and flexible-space.
Consider this. To rent office space here will cost about $200 per square foot.
Compare that with $184 in Midtown Manhattan.
While those areas are currently the world's most expensive, other areas are climbing the list.
Durban in South Africa shot up by more than 20% in occupancy costs from last year.
Followed by Bangkok, Marseille, Vancouver and Oslo.
There are many factors that contribute to changes in price, like government regulations,
supply and demand and foreign exchange rates.
One CBRE report however found that growing costs are being driven
by demand for the growth of industries like finance, technology and e-commerce.
Meanwhile, markets linked to resource-based economies are also seeing a demand increase,
due to rising commodity prices.
That could partially explain why South Africa, Canada and Norway saw rent soar.
But office rent isn’t going up across the board.
Some areas saw a big decrease.
Topping the list is Dubai with a dramatic 15% drop in costs,
followed by Shanghai, New York’s midtown, Moscow and then Abu Dhabi.
These markets were primarily affected largely because of the supply and demand imbalances.
Often, when too many new buildings hit the market, it drives costs down.
But it’s all relative.
If you want to rent in the Pudong district of Shanghai, that will set a company back
$139 per square foot.
While that has gone down about 5% this year, it’s still far from inexpensive.
It's still more pricey than Paris and San Francisco.
With the pricey rent that some companies are willing to pay for their office space,
there’s one thing that’s for sure.
Working from home may never be an option.
Hey guys, it’s Uptin. Thanks for watching!
For more of our videos check out, “Why is Hong Kong Housing So Expensive?” here,
and how the city is losing its significance in banking, here.
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