Hong Kong to hold top spot as world's most expensive office market

Hong Kong will retain its title as the world's most expensive office market in 2019 despite an anticipated rent decrease, international property adviser Knight Frank said in a recent industry outlook report.

Benefiting from tight supply, rents in Hong Kong are expected to stand at around US$2,578 per square meter per annum this year, down from 2018's estimate of US$2,714 but still well above the 10-year average of US$2,084, according to the global consultancy.

Rents in Beijing are expected to fall slightly from 2018's estimate of US$669 to US$662 per square meter per annum, earning the Chinese capital city the No.11 spot. Shanghai, which ranks No.18 this year, will probably see its office rents unchanged at US$506 per square meter per annum.

"In the Chinese mainland, Beijing has the highest rental price for premium offices, and Shanghai comes next," said David Ji, director and head of research and consultancy for Knight Frank China. "In the mid to long term, the supply of office space in Beijing still faces acute shortages."

Demand for new Grade A office buildings in Beijing is mainly driven by Internet and high-tech companies, while in Shanghai, leasing demand from emerging industries such as co-working spaces, artificial intelligence and new energy is strong, according to the report.

Melbourne and Sydney, which are forecast to rank No.21 and No.7 this year, will see the largest rental growth with rents rising 10.1 percent and 8.6 percent, respectively, from 2018. Both of the Australian cities are experiencing tight supply due to employment growth and relatively low levels of development completions in recent years, Knight Frank predicted.