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Hong Kong Remains Most Expensive Office Fit-Out Market in Greater China

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  • Hong Kong ranked 9th in APAC markets, amid weakened office market demand 
  • Beijing and Shanghai jointly ranked 13th

Hong Kong remains the most expensive office fit-out market in Greater China with an average of USD 130 per square foot, according to Cushman & Wakefield‘s newly released Asia Pacific Office Fit-Out Cost Guide 2020-21. The study provides an overview of office fit-out costs across 31 key markets in the Asia Pacific region and gives insights on business and workplace strategies for the pandemic recovery period and adoption to the “new normal.”

Among all APAC markets in the study, cities in Japan and Australasia continue to dominate the Top 10 list. Tokyo, Osaka, Nagoya and Sydney lead the rankings, with Melbourne climbing four spots to fifth this year.

Hong Kong ranked 9th, down two places from last year. However, the city remains the highest-ranked market in Greater China. Beijing, down three places from last year, is jointly ranked with Shanghai at 13th on the list. Both cities are the most expensive markets in mainland China.

The top 10 cities in Asia Pacific with the highest office fit-out costs are:

 

2020 RANK

CITY

AVERAGE COST

(USD PSF)

RANKING CHANGE

1

Tokyo

201

2

Osaka

193

3

Nagoya

188

4

Sydney

160

5

Melbourne

155

▲4

6

Auckland

140

▼1

7

Brisbane

137

▼1

8

Adelaide

131

New

9=

Hong Kong

130

▼2

9=

Seoul

130

▲1

11

Perth

123

▼3

12

Busan

118

▲2

13

Beijing

115

▼3

14

Shanghai

115

▼1

15

Singapore

112

▼3

Source: Cushman & Wakefield

 

Asia Pacific is forecast to emerge from the downturn earlier than other regions across the globe and is well-positioned to return to strong economic growth by the end of 2020. While the region’s long-term fundamentals remain intact, the short but sharp recession will continue to echo and shape corporate decision-making into the future. Effectively, trends that may have taken many years to come to full fruition are being fast-tracked.

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“As a result of the global pandemic, the increases in fit-out costs seen in recent years has reversed in most markets across the region. This trend is likely to persist as corporate occupiers continue to assess their capital expenditure budgets and corporate footprint requirements,” said Tom Gibson, Head of Project & Development Services, Asia Pacific, Cushman & Wakefield.

“We are also seeing greater integration of workplace strategy expertise into the early stages of the design and fit-out process,” said Gibson. “With working lifestyles and preferences evolving following the pandemic, companies are increasingly focused on aligning their space requirements with efficient workplace strategies and HR policies to better meet their corporate business and financial goals.”

Bryant Cheung, Head of Project & Development Services, Hong Kong, Cushman & Wakefield, commented, “There has been a slowdown in Hong Kong’s office market, with softening demand and substantial new supply coming in 2022 together underpinning rising availability and declining rental levels. The pandemic has evidently impacted how occupiers consider their space needs. Looking ahead, Q1 of 2021 will be characterized by a greater emphasis on agility, with reduced demand from office expansion or upgrading. Instead, we expect to see more cases of consolidation and relocation driven by business needs and concerns.”

The survey further suggested an intensifying focus on health and safety, bringing forward greater adoption of touchless technology, improved Heating, Ventilation, and Air Conditioning (HVAC); and smarter cleaning practices. Prolonged, enforced working from home has highlighted that productivity can be maintained, but at the cost of personal connection to colleagues and company culture.

This raises questions around the optimal size and composition of the corporate footprint, while highlighting the need for ongoing investment into IT and audio-visual technology for collaborative team working. All these factors are important considerations as companies remain laser-focused on costs.

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