Hong Kong leads way on prime prices

Hong Kong's Central district has topped the list as the most expensive office market in the world, outpacing the business districts in the US, Europe and Australia.

According to the latest CBRE report, Sydney, the highest priced Australian market, was in 13th position, followed by Perth (21st), Brisbane (29th), Melbourne (49th), Adelaide (71st) and Canberra (93rd).

Perth also made it into the Top 20 list of cities with the biggest increase in occupancy costs, ranking in 16th place.

The outlook for office leasing is mixed. The average rent in Sydney for premium space remains above $1000 a square metre, while Melbourne is slightly lower, due to the new supply that is coming on later in the year.

The National Australia Bank's property at 700 Bourke Street was developed, managed and owned by Cbus Property, designed by Woods Bagot and built by Brookfield Multiplex. It forms a gateway to Melbourne Docklands adjacent to Southern Cross Station and Etihad Stadium.

The A-grade 63,000 square metre commercial building - which has achieved a six-star Green Star rating - spans 16 levels and will be home to 6000 NAB employees.

The building features an all-access area for members of the public, with cafes, shops and a digitised NAB retail store.

According to the head of research for Australia at CBRE, Stephen McNabb, Sydney's top ranking in the Australian region was consistent with the report's overall findings that the most expensive office markets are the ones that attract the regional headquarters of large multinationals, particularly those in the financial industry.

He said Sydney had the highest exposure to this market sector. However, Mr McNabb said there had been a "value shift" to Perth, as shown by the city's high ranking on the list of cities with the highest growth in occupancy costs.

"The increase in the terms of trade driven by high commodity prices has boosted income in the WA market relative to other Australian states," Mr McNabb said.

"This has supported capacity to pay higher rents in Perth."

According to the report, the position of Hong Kong's Central district as the most expensive office market continues to be bolstered by its status as a global financial centre.

"Although financial institutions have become more cost-sensitive, with some considering relocating to less expensive space outside the CBD, high-quality and premium space is still sought after, especially by mainland Chinese firms which are increasingly setting up their offices in Hong Kong in prestigious buildings," the report says.

North America was again led by New York's Midtown, which posted a prime office occupancy cost of $US120.65 ($132.58) per square foot, reflecting a 5.6 per cent year-on-year increase.

The Midtown market jumped to 10th globally, marking its first return to the top 10 since the beginning of 2012, reflecting continued demand for premium space by top-tier investment and legal firms.