Knight Frank, the independent global property consultancy, launches the fourth edition of Global Cities: The 2018 Report. The report looks into the continuous trends in real estate across 40 Global Cities, equipping occupiers and investors with insights for future real estate decisions. The report features the Skyscraper Index which examines the rental performance of commercial buildings over 30 storeys across 23 Global Cities.
Mr. Marcus Burtenshaw, Executive Director and Head of Commercial Agency Department, Knight Frank Thailand, Co., Ltd., has pointed out that “Despite reaching record highs, office rents in the Thai capital are just 10% of those in Hong Kong, and less than half of those in Singapore. However, Bangkok’s prime office rents saw a slight dip in growth over the first half of this year, but a rebound by year’s end is expected as new supply is absorbed.”
Highlights of the Skyscraper Index:
- For the fourth year running, Hong Kong’s skyscrapers continue to command the highest rents in the world at US$304 per sq ft. The gulf between rents in the tallest buildings on Hong Kong Island and other markets continue to widen – this is evident with the tall towers in Hong Kong being 88% higher than second-placed New York this year, compared to 76% last year.
- This is followed by Tokyo at US$140 per sq ft. Completing the top 5, skyscraper rents in San Francisco have risen to $117 per sq ft, ahead of London at US$110 per sq ft.
- The Skyscraper Index also shows Toronto’s skyscrapers are experiencing the highest rental growth, rising 11.9% in the first half of the year to US$58 per sq ft.
- Over in the pacific, above average demand and tight vacancy rates have driven Australia’s skyscraper rents upwards. The country’s skycrapers saw strong rental uplifts in the first half of 2017, with Melbourne (4.6%) and Sydney (3.4%) ranking third and fifth respectively in terms of rental growth globally. However, skyscraper rents in Melbourne (US$56 per sq ft) remain only approximately half of those in Sydney (US$107 per sq ft).
- Rental growth was also evident in North American cities New York (1.8%), San Francisco (3.5%) and Chicago (1.6%), as the recovering economy and low unemployment rate translated into increased business confidence and demand for space in trophy buildings.
Nicholas Holt, Asia Pacific Head of Research, Knight Frank, says, “Demand from Chinese mainland institutions has been a major contributing factor in driving rents upwards in skycrapers clustered around Central on Hong Kong Island.
“Elsewhere in Asia, Tokyo, which stands third in the global list offers skyscraper office space for less than half the rents that an office occupier would be expected to pay in Hong Kong; while Singapore is less than half of that again.
“Looking forward, with continued interest from occupiers for tall towers offering the best panoramic views, we expect demand for skyscraper office space across the Asia Pacific region to continue to remain robust.”
William Beardmore-Gray, Global Head of Occupier Services and Commercial Agency, Knight Frank, says, “Firms pay to be in skyscrapers for the wow factor, but it is no coincidence that the top five places in this ranking happen to be world’s leading business centres. There are cities with far more famous and much taller skyscrapers than London or Hong Kong, that rank lower in the table.
“These figures are a wake-up call and show that demand for space, and rents, in London’s prestigious towers will only hold up if the city continues to be seen as a top five centre of international commerce.”
Table 1: Skyscrapers Index: Prime office rents for upper floors in skyscrapers (as of Q2 2017)