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Hong Kong office rents triple those of Singapore

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Hong Kong's office rents are almost three times higher than those in Singapore as property markets in the two cities diverged sharply in recent years, according to a report by commercial real estate services company Cushman & Wakefield.

The gap boosted Singapore's appeal as a competitive business hub and made it a more attractive location for companies to house their regional headquarters, said the report released yesterday.

Hong Kong's office rental premium over Singapore - in US dollars and after adjusting for inflation - reached 195 per cent as of the end of last year, according to an analysis done by Cushman & Wakefield.

Scarce supply in Hong Kong's Central area helped push rents higher, while the situation has been just the reverse in Singapore, which created an ample office supply in the newer financial district of Marina Bay.

The rental gap between Singapore and Hong Kong was even higher than the 189 per cent in 2010 during the post-financial crisis period, and it is in stark contrast to the narrow gap of just 47 per cent in 2003 during the Sars outbreak.

The difference in rental movement between the two markets is particularly stark when compared over a longer time period, said Cushman & Wakefield. As of end of last year, Singapore Grade A office rents, adjusted for inflation, were 13.4 per cent lower than rents in 2000. In contrast, Hong Kong rents were 81 per cent higher than that in 2000.

Hong Kong's office market was in recent years buoyed by the weight of demand from banks and financial firms from China, stirred by the introduction of the Shanghai and Shenzhen Stock Connect programmes, said the report.

It is also seen as a natural base for international banks and financial firms focusing on the Chinese market.

In contrast, the competitive leasing environment in Singapore has prompted developers to offer more attractive leasing terms to drive occupancy rates.

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