Individuals seeking to invest in the international commercial property market should shift their gaze to Hong Kong, one of the most expensive places in the world to rent an address.
Even though prices have fallen by at least 20 per cent in the past five years, the demand for office space in Hong Kong is so high that there is a major undersupply of Grade A space. The government is currently hoping to build a new business district to meet this demand, whilst existing offices are set to be relocated. This is in contrast to office vacancy which is not only at a mere 3.4 per cent, but is at a record low for the region, according to Frank Knight’s recent Market Outlook Report.
There is in total 74 million sq ft of office space in Hong Kong, 23 per cent of which is in the central Business District and 15 per cent in Kowloon.
Looking beyond to other major cities around the world, financial districts in Singapore and Ney York have also faced recent shortcomings, but Hong Kong has one of the smallest business districts, compared to the number of offices it has packed in. Furthermore, property in the area is aging quickly, as 50 per cent of the Grade A space is at least 20 years old, whilst 57 per cent of the business district was constructed before 1990.
As demand in the city rapidly increases, so does rental prices. Whilst this is perfect for overseas investors, competition in the city will inevitably decline.
For those wanting to dip their toes in the commercial property market, Hong Kong may be a great place to start. Other areas of interest include Dubai and Rio de Janeiro, Brazil; both of which have seen rental prices dramatically rise in the past three years.