Singapore is a "cost-effective office location" as premium office space in Hong Kong remains the world's priciest for the fourth year running, real estate consultancy JLL said yesterday after it released a report.
In Singapore, the rental for such office space averages US$108 (S$148) per sq ft, about a third of that in Hong Kong's Central district at US$338 per sq ft.
The rental in Hong Kong's central business district is about 60 per cent more expensive than in New York's Midtown, which came in second in the global ranking of 72 major office markets in 61 cities.
This is the fourth edition of JLL's Premium Office Rent Tracker.
The high rental costs in Hong Kong are attributed to Chinese firms snapping up grade A office space there, said JLL.
Singapore was ranked 10th in the list of most expensive premium office markets in Asia, up from 14th place last year.
"Singapore stacks up very competitively given that it is a global hub for multiple high-value industries and offers a high-quality standard of living, yet is cheap relative to other global hubs," said JLL Singapore's head of leasing Chris Archibold.
"The net result of this is that we are seeing expansion across multiple sectors, including a marked increase in demand from the technology sector," he added.
JLL's report uses data on the achievable rent in the highest quality building in the premier office districts in the cities.
It includes key elements of occupancy costs - net effective rent, service charges and property tax - which are all standardised to enable international comparisons.
In recent months, international firms have announced plans to set up regional headquarters in Singapore, including Nasdaq-listed medical tech firm Guardant Health and French energy company Engie.
Engie Asia-Pacific chief executive Paul Maguire said in October that Singapore was a natural choice for Engie as many of its clients are based here. He also cited Singapore's Smart Nation vision and leadership in innovation and sustainability.
However, JLL said banking and financial services firms are still the top occupiers of premium office space globally.
Demand for office rental remains strong in Singapore. The office rental index for the central region rose 2.5 per cent in the three months to Sept 30 over the second quarter, based on data from the Urban Redevelopment Authority.
Cushman & Wakefield expects grade A office rents in Singapore to rise by 11 per cent this year and 9 per cent next year, Bloomberg reported recently.