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

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

HONG KONG SAR – Media OutReach – 16 December 2020 – 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 9^th, 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 ten 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.

 

“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. 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.

 

About
Cushman & Wakefield’s Asia Pacific Office Fit-out Cost Guide

Cushman
& Wakefield’s Asia Pacific Office Fit-out Cost Guide is an essential tool
to assist in corporate real estate decision-making regarding both fitting out
and reinstating office space. The annual guide, which was
first published in 2019, serves to assist occupiers in defining their capital
planning and relocation budgets. It provides an overview of the office fit-out
construction costs across 31 key gateway cities in the region, including a comprehensive fit-out cost
section covering furniture, mechanical & electrical works, builder works,
audio visual/IT and other miscellaneous costs. Download the Asia Pacific Office Fit-out Cost Guide 2020-2021
here.