Skyscrapers in Hong Kong are the most expensive commercial real estate assets in the world. Is it hurting the bottom line of global banks.
New analysis from global real estate advisor Knight Frank, (KF) confirms pricing for Hong Kong skyscrapers is now the highest in the world.
Several major banks have relocated away from the traditional central business district on Hong Kong island crossing the harbour to Kowloon in an effort to get more bang for their buck, at least for now.
Hot Money From China
KF has analysed Skyscraper Capital Values for the first time as part of its inaugural Active Capital, The Global Report 2017.
According to the analysis, which uses rental values as at quarter four 2016 and prime yields as a basis, pricing for skyscrapers in Hong Kong has reached an eye watering $8,000 per square foot (psf).
This puts Hong Kong prices over 60 percent higher than tall buildings in Tokyo, where pricing is estimated at $4,900 psf versus other global cities like New York at $3,700 psf and London at $2,450 psf. Other Asian cities that are priced above $1,000 psf include Singapore, Taipei and Shanghai.
Banks Must Move
Even major financial institutions such as Citi could not stand the crushing costs and moved its headquarters across the harbour from Central to East Kowloon last year to save costs. A few years earlier Credit Suisse and Morgan Stanley also headed over the harbour.
Capital values of Asia’s tallest towers showed significant divergence at the end of the fourth quarter of 2016, with Hong Kong sitting at the top and Mumbai at the bottom of the global rankings.
«In Hong Kong, continued strong demand and a lack of new land supply continues to push values higher, while the structure of the Mumbai office market, has tended to see office markets develop outwards rather than upwards,» said Nicholas Holt, Head of Research for Asia Pacific at KF.
