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  • This building in Hong Kong is one of the most expensive office towers in the world.

  • And in this part of town, demand for space is hot.

  • With no signs of slowing down, this district, Central tops the list of places with the most expensive office rent around the world.

  • Hong Kong has held its spot at the top for three years now.

  • If you want to rent an office in this area, expect to pay about $306 per square foot, on average.

  • When it comes to districts with the most expensive office space, Asia is leading the way.

  • It makes up more than half of the top ten,

  • and London's West End is the only non-Asian district in the top five.

  • Hong Kong's average price for a square foot of office space is around

  • 30 percent higher than London's West End at second place,

  • followed by Beijing's Finance Street, Hong Kong's Kowloon and Beijing's Central Business District.

  • That's not stopping the likes of HSBC, JP Morgan and hedge funds like Steve Cohen's Point72

  • from putting their regional headquarters in Hong Kong's financial district.

  • While Central Hong Kong is a convenient place for workers to commute to and clients to visit,

  • there's also an element of prestige in having an office address here, too.

  • And that prestige is enticing mainland Chinese companies to move in.

  • They're willing to pay top dollar to make a statement.

  • A slew of Chinese companies have moved in like Chinese conglomerate, HNA Group.

  • The demand in Hong Kong is driven primarily by banking and finance sectors.

  • This building is called The Center.

  • Last year, it was sold for $5.15 billion.

  • That sale could have heavyweights like Goldman Sachs partially moving out.

  • It's reportedly moving its back office to another, cheaper part of Hong Kong.

  • which one analyst says could help the firm save 30 percent on office rent.

  • All by moving to a space about a 20-minute drive away.

  • Across from the district of Central, is an area known as Kowloon.

  • It saw a 12 percent increase in the cost of office space,

  • putting it in the fourth most expensive place in the world.

  • Hong Kong isn't the only expensive hub in Asia.

  • This is Financial Street, located on the western part of China's capital.

  • The district jumped three places on the most expensive list to the third position.

  • As China's economy and financial markets open to the world,

  • it's driving up the cost of both office and residential real estate.

  • Meanwhile, the nation is seeing a growing demand in big cities

  • and a booming middle class.

  • The demand is being driven by finance, technology and flexible-space.

  • Consider this. To rent office space here will cost about $200 per square foot.

  • Compare that with $184 in Midtown Manhattan.

  • While those areas are currently the world's most expensive, other areas are climbing the list.

  • Durban in South Africa shot up by more than 20 percent in occupancy costs from last year.

  • Followed by Bangkok, Marseille, Vancouver and Oslo.

  • There are many factors that contribute to changes in price, like government regulations,

  • supply and demand and foreign exchange rates.

  • One CBRE report however found that growing costs are being driven

  • by demand for the growth of industries like finance, technology and e-commerce.

  • Meanwhile, markets linked to resource based economies are also seeing a demand increase,

  • due to rising commodity prices.

  • That could partially explain why South Africa, Canada and Norway saw rent soar.

  • But office rent isn't going up across the board.

  • Some areas saw a big decrease.

  • Topping the list is Dubai with a dramatic 15 percent drop in costs,

  • followed by Shanghai, New York's midtown, Moscow and then Abu Dhabi.

  • These markets were primarily affected largely because of the supply and demand imbalances.

  • Often, when too many new buildings hit the market, it drives costs down.

  • But it's all relative.

  • If you want to rent in the Pudong district of Shanghai, that will set a company back

  • $139 per square foot.

  • While that has gone down about 5 percent this year, it's still far from inexpensive.

  • It's still more pricey than Paris and San Francisco.

  • With the pricey rent that some companies are willing to pay for their office space,

  • there's one thing that's for sure.

  • Working from home may never be an option.

  • Hey guys, it's Uptin. Thanks for watching!

  • For more of our videos check out, “Why is Hong Kong Housing So Expensive?” here,

  • and how the city is losing its significance in banking, here.

  • We're also taking suggestions for future CNBC Explains so leave your comments in the section below,

  • and while you're at it, subscribe to our channel.

This building in Hong Kong is one of the most expensive office towers in the world.

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Where are offices most expensive? | CNBC Explains

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    Samuel posted on 2018/07/24
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