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:

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.

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 53,000 employees in 400 offices and 60 countries. Across Greater China, 22 offices are servicing the local market. The company won four of the top awards in the Euromoney Survey 2017, 2018 and 2020 in the categories of Overall, Agency Letting/Sales, Valuation and Research in China. In 2019, the firm had revenue of $ 8.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com.hk or follow us on LinkedIn (https://www.linkedin.com/company/cushman-&-wakefield-greater-china)