Hong Kong ranks as the most expensive city in the world in terms of rents, followed by New York and London, according to a 2018 report released by real estate consultancy Savills.
he average cost of renting office and residential space per employee in Hong Kong is US$112,400 ($155,118) annually, a rise of 5% y-o-y. An equivalent space in New York costs US$108,200, a 1.7% reduction y-o-y. London rents fell 1.3% y-o-y to US$96,000.
Singapore took 13th place, right behind Sydney. The city state chalked up a cost of US$51,200 per employee annually, a 2.4% increase y-o-y (in Singapore dollar terms, the cost fell 0.1% y-o-y). Sydney recorded a cost of US$51,600 per employee yearly.
Apart from Hong Kong, other Asian cities that feature in the top 10 are Tokyo and Beijing, at fourth and 10th spots respectively. Tokyo saw cost per employee rise 3.7% y-o-y to US$84,500. Cost per employee in Beijing was US$54,900, down 0.2% y-o-y.
London held the top spot as the most expensive place rentwise from 2011 to 2015.
Savills placed two seven-person staff teams in each of the 33 cities, one in a prime financial sector location and the other in a secondary location, to represent cross-city costs. The results are obtained by taking the average cost of both teams, covering rents of home and office space per employee.
Residential rents in Hong Kong have been driven higher because of limited supply, especially in the prime markets, says Savills. Office rents in the city have been inflated by demand from Chinese firms and new tech and co-working operators, it adds.
Mainland Chinese cities have also climbed rapidly up the ranks in recent years, the report states.
Shenzhen has risen to 16th place, from 20th, in one of the bigger jumps. Its cost has risen 20.9% to US$48,700, just behind 15th-place Shanghai’s at US$49,300. Employees have flocked to the city, driving rents upwards. Demand for office space remains high, with the city attracting firms from the finance industry, high-tech and advanced manufacturing sectors, and co-working operators, Savills highlights.
In Tianjin, which occupies the 32nd spot, rents increased 22% y-o-y to US$16,100, recording the highest jump among the cities in Savills’ ranking. The rental cost, however, still equates to one-seventh of that in Hong Kong.