Hong Kong, home to the coffin apartment and the world’s highest office rents, ranks as the most expensive city in Asia to accommodate staff, and globally comes second only to New York for the cost of leasing a home and finding an office for your team, according to a recent report by Savills.
The Asian financial hub jumped 5.1 percentage points on Savills Live-Work Index, which compares office and residential leasing costs across 20 cities globally, ranking just behind New York and above London for the second year in a row.
Annual Costs for HK Space Top $100k Per Person
At an average annual cost of $105,400 per head to both house and provide work space for a team member, Hong Kong continued to close the gap on New York in Savills’ index. Average costs for renting residential and office space in the famously cramped city rose four percent in the second half of 2016, according to the London-based firm.
The property consultancy attributed Hong Kong’s recent rise in part to a steep climb in residential renting costs, which it attributed to knock-on effects from the city’s new stamp duty on home purchases.
Tokyo was the only other Asian city to crack the top five globally, coming in at number five overall. However, the Japanese capital’s annual live-work accommodation cost per head of $73,700, is less than 70 percent of but Hong Kong’s $105,400 costs.
Next on the list for Asia is Singapore, which doesn’t even break the top ten and has a live-work accommodation cost per head of $48,200, less than half that of Hong Kong. The only mainland Chinese city to make the cut is Shanghai which is closer to Singapore than one might imagine: $43,400 per head. Mumbai came in low on the list with $29,800.
“The real test of whether a city is good value for occupiers lies in how productive an organisation can be in that city and how competitive a city is in attracting human capital to its job market,” says Yolande Barnes, director at Savills World Research. “In many cities, the cost of office accommodation pales into insignificance against the cost of personnel and residential rents will impact wage demands, hence the inclusion of housing in our live-work index.”
More on the Metrics
Savills used a core unit of measure they call the Savills Executive Unit, a seven-person staff meant to represent a small startup business, which Savills believes is comparable across all cities, so it may not be analogous to industries such as manufacturing.
The live-work index measures the cost of two hypothetical teams so as to spread the base measures, one in a prime financial sector location and one in a “secondary/creative” location, and it measures the annual per person cost of renting, owning a home and average office space per employee.
Besides the Brexit breaking London’s lead, other major drops took place in Nigeria’s Lagos and Dubai. Dublin made the biggest jump on the list followed by Johannesburg, for 9.5 and 8.1 percent respectively.