Business districts in Beijing and Guangzhou had the biggest increases in office occupancy costs globally in the first quarter, according to a report by CBRE Group Inc., the world’s largest commercial realtor.
Four other locations in the Asia-Pacific region -- Shanghai’s Pudong district, Jakarta, Sydney and Bangalore -- along with two areas in San Francisco, and Moscow, made up the other top 10 spots, the Los Angeles-based company said. Two areas in Beijing -- Jianguomen and the Finance Street -- topped the survey with increases of 49 percent and 42 percent from a year earlier. Guangzhou, southern China’s biggest city, was third with a 40 percent gain.
Multi-national companies are expanding their footprint in emerging markets to tap growing spending power in countries such as China and India. Demand for prime office space in first-tier cities in China, the world’s fastest growing major economy, is also being driven by a lack of new supply and the expansion of domestic financial institutions, according to CBRE.
“People are really looking at China and Asia with a longer term view,” Kim Mercado, a Hong Kong-based research director at CBRE, said in an interview. “They’re saying they want to be there and they want good quality space and also taking longer leases as well.”
Hong Kong’s Central district, home to the world’s fourth largest stock market, has the highest overall occupancy cost of $248.83 per square foot a year. It is followed by London’s West End, at $220.15, and Tokyo, at $186.49. Jianguomen in China’s capital is fourth with $180.76.
Hong Kong topped the chart even as occupancy costs there showed the biggest decrease among the 133 global locations in the survey. The city’s government has cut its economic growth forecast for this year because of concerns over the European debt crisis and a slowdown in China’s economy.
Of the 15 biggest decreases in office costs, Spain accounted for three, while Greece had two. Dublin, Zurich and Sofia were also among the biggest decliners.