Hong Kong office Tenants incur the second-highest expenses globally for premium locations, ranking just below those in London's West End, as per research conducted by property consultant firm Savills.
According to the study, which monitored premium office spaces across 40 global markets during the first quarter, the annual expense for an office space in Hong Kong was approximately US$228 per square foot, covering both rental fees and fitting expenses. However, this figure represents a decrease of about 1.1% from the previous quarter, as stated by Savills on Wednesday.
In London's West End, an upscale office tenant faced average occupancy expenses of $299 per square foot annually, whereas occupants in third-place Midtown, New York City, incurred costs of approximately $207 per square foot each year, according to the report.
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In the second quarter of 2022, according to Savills' findings, Hong Kong emerged as the global leader in terms of office rental expenses, costing $250.56 per square foot annually. Data from CBRE indicates that since 2019, rent prices in Hong Kong offices have dropped by 40%, partly due to insufficient demand compared to an increasing supply. The previous year saw this trend continue, with a decline in rental rates within the sector amounting to 6.3%.
"Savills reported that globally, the rent for premium office spaces saw an uptick in the first quarter of 2025, with prices climbing by an average of 0.6 percent. Additionally, fit-out expenses went up by 0.7 percent over this time frame, building upon a 0.2 percent rise seen in the last three months of 2024, which underscores tenants’ persistent preference for top-tier workspaces," Savills stated.
The Savills report monitors office spaces that command rental rates within the uppermost 5 percent to 10 percent in their respective markets. This yearly comprehensive occupancy expense reflects current leasing conditions for an area of 20,000 square feet of useable space, calculated from a collection of the five priciest properties in every market analyzed.
Hong Kong is dealing with an oversupply of commercial spaces that could take anywhere from seven and 15 years to break down As per experts' analysis, the city boasts an additional 15 million square feet of unused office space, surpassing the total area currently utilized in the principal business district.
Grade A vacancy rates in Hong Kong rose to 13.7 percent in March from 13.3 percent in February, as reported by JLL.
In 2025 and 2026, approximately 6 million square feet of additional office space Including 2.6 million square feet at the International Gateway Centre in West Kowloon and 1.06 million square feet at Lee Garden Eight in Causeway Bay, these properties will soon be available, as per data gathered by Midland IC&I.
The overall net effective costs in the Asia-Pacific region remained stable, showing only a 0.1 percent increase in the first quarter, due to declining rates in China amid a sluggish economic forecast, according to the study. Nonetheless, other markets within the Asia-Pacific saw an upturn.
According to the Savills study, premium office tenants in Tokyo encountered the fifth-highest expenses worldwide at $156.11 per square foot, followed by Singapore which placed ninth with costs of $148.88. Meanwhile, Shanghai and Beijing secured the 14th and 17th positions, respectively.
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