Rents in Hong Kong are getting so high that some foreign consulates are moving out of the city’s central business district.
At least three have relocated recently or are planning to do so.
The consulate of Sweden has moved from the Hong Kong Club Building in Central to the Bank of East Asia Harbour View Centre in Wan Chai, while the Romanian consulate has shifted from the Lippo Centre in Admiralty to 148 Electric Road in North Point.
The Canadian consulate is also moving. It decided several months ago to move its visa department from Exchange Square in Central to the DCH Commercial Centre in Quarry Bay.
Hong Kong remains the priciest office market in the world.
The cost of occupying an office fell 17.2 percent to US$249 per sq ft per annum in the first quarter year-on-year, the largest decrease in all global markets.
But this was still 11 percent more expensive than the West End of London, which ranks second at US$220, and 33 per cent ahead of Tokyo at US$186, according to a CBRE report released yesterday.
“One European country saw the rent for its consulate in Hong Kong rise by 60 per cent when the two-year tenancy expired recently,” a Hong Kong-based Western diplomat said, without naming the country.
“The problem of soaring rent has emerged as a hot issue in diplomatic circles in Hong Kong.”
Office rents in Admiralty are about 28 per cent lower than in Central, while levels in Wan Chai are 40 per cent lower. Offices in other parts of Hong Kong Island are up to 60 per cent lower.
With tenants turning their backs on Central, vacancy rates in different districts have reversed. In September last year more than one-third of all available office space could be found in East Kowloon and just one fifth in Central. By the end of last month, one-third of available space was in Central, with just 7.5 per cent in East Kowloon.
Estimates based on GDP growth projections show the city could face a big shortage of grade A office space by the end of the decade, the report warned, with the projected increase in supply of 8 million square feet less than half the 17 million sq ft needed.
Nine European Union member states – the Czech Republic, Finland, Italy, Latvia, Luxembourg, Poland, Spain and Sweden and cash-strapped Greece – have their consulates in Wan Chai.
The Brazilian consulate is also located in Wan Chai.
Eleven, including France, Germany, UK and Japan, are in Central or Admiralty.