Asia dominates world’s most expensive office spaces

June 23, 2013 Leave a comment

Asia dominates world’s most expensive office spaces: report

4:04am EDT

By Ilaina Jonas

NEW YORK (Reuters) – Five of the six most expensive office areas in the world are in Asia, as demand by global companies to locate their outstripped the supply, according to a semiannual report released on Thursday by real estate services company CBRE Inc.For the third consecutive time, Hong Kong’s Central business district had the highest overall occupancy cost, which includes local taxes and service charges. Hong Kong’s Central averaged $235.23 per square foot annually at the end of March, leading London’s West End at $222.58. Beijing’s Finance Street followed at $195.07 per square foot with Beijing’s central business district right behind at $187.06.

“Demand is coming from a lot multinational corporations who want to place a stake into these developing economies,” said Raymond Torto, CBRE’s global chief economist. “When they look around some of these cities, they want to be in the best locations because there’s not a lot of good infrastructure. You want to be close to other businesses. You want to be close to transportation. And you want to be in a quality property.”

Meanwhile, supply is muted by either height restrictions or ownership in which even in the best buildings separate floors can be owned by different landlords. That restricts opportunities to upgrade a building and can limit the availability of contiguous space, he said.

At No. 5 New Delhi’s Connaught Place’s occupancy cost was $178.96 per square foot with Hong Kong’s West Kowloon area at $173.90, according to the report that covers 127 markets around the globe.

Moscow, Tokyo’s Marunouchi/Otemachi district and London’s Central City followed with Midtown Manhattan making 10th place at $120.65 per square foot.

Jakarta saw the biggest increase, with occupancy costs jumping 38.9 percent compared with a year earlier. Two of Houston’s office areas also made their way into the top five areas where occupancy costs increased the most. In suburban Houston, occupancy costs jumped 21.2 percent to No. 2. Houston’s downtown occupancy costs rose 14.9 percent, fourth behind downtown Boston, where occupancy costs rose 15.4 percent.

Globally, occupancy costs rose by 1.4 percent.

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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