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Kuala Lumpur’s skyscraper rents offer the best value among the Global Cities

12 October 2017

11 October 2017, Kuala Lumpur – Knight Frank, the independent global property consultancy, launches the fourth edition of Global Cities: The 2018 Report. The report looks into the continuous trends in real estate across 40 Global Cities, equipping occupiers and investors with insights for future real estate decisions. The report features the Skyscraper Index which examines the rental performance of commercial buildings over 30 storeys across 23 Global Cities.

 
Highlights of the Skyscraper Index:
 
·         For the fourth year running, Hong Kong’s skyscrapers continue to command the highest rents in the world at US$304 per sq ft.  The gulf between rents in the tallest buildings on Hong Kong Island and other markets continue to widen – this is evident with the tall towers in Hong Kong being 88% higher than second-placed New York this year, compared to 76% last year.
 
·         This is followed by Tokyo at US$140 per sq ft.  Completing the top 5, skyscraper rents in San Francisco have risen to $117 per sq ft, ahead of London at US$110 per sq ft.
 
·         The Skyscraper Index also shows Toronto’s skyscrapers are experiencing the highest rental growth, rising 11.9% in the first half of the year to US$58 per sq ft.
 
·         Over in the pacific, above average demand and tight vacancy rates have driven Australia’s skyscraper rents upwards.  The country’s skycrapers saw strong rental uplifts in the first half of 2017, with Melbourne (4.6%) and Sydney (3.4%) ranking third and fifth respectively in terms of rental growth globally. However, skyscraper rents in Melbourne (US$56 per sq ft) remain only approximately half of those in Sydney (US$107 per sq ft).
 
·         Rental growth was also evident in North American cities New York (1.8%), San Francisco (3.5%) and Chicago (1.6%), as the recovering economy and low unemployment rate translated into increased business confidence and demand for space in trophy buildings.
 
·         Kuala Lumpur’s skyscraper rents at US$23 per sq ft, offer the most value among the 23 Global Cities, have remained flat since last year.
 
Sarkunan Subramaniam, Managing Director of Knight Frank Malaysia, comments, “By 2020, more skyscrapers will dot the Kuala Lumpur skyline with the scheduled completions of the iconic PNB Warisan 118 Tower and Exchange 106 in Tun Razak Exchange (TRX). PNB Group of Companies will occupy 60 floors of the RM5 billion 118-storey tower which will be fifth tallest building in the world on completion.”
“The entry of these skyscrapers will raise the benchmark of premium grade office space in Kuala Lumpur and is deemed timely as Greater Kuala Lumpur continues to attract MNCs and transforms into a sustainable and liveable metropolis.”

Nicholas Holt, Asia Pacific Head of Research, Knight Frank
, says, “Demand from Chinese mainland institutions has been a major contributing factor in driving rents upwards in skycrapers clustered around Central on Hong Kong Island.
“Elsewhere in Asia, Tokyo, which stands third in the global list offers skyscraper office space for less than half the rents that an office occupier would be expected to pay in Hong Kong; while Singapore is less than half of that again.
“Looking forward, with continued interest from occupiers for tall towers offering the best panoramic views, we expect demand for skyscraper office space across the Asia Pacific region to continue to remain robust.” 
 
William Beardmore-Gray, Global Head of Occupier Services and Commercial Agency, Knight Frank, says, “Firms pay to be in skyscrapers for the wow factor, but it is no coincidence that the top five places in this ranking happen to be world’s leading business centres. There are cities with far more famous and much taller skyscrapers than London or Hong Kong, that rank lower in the table.
“These figures are a wake-up call and show that demand for space, and rents, in London’s prestigious towers will only hold up if the city continues to be seen as a top five centre of international commerce.”
Skyscrapers Index: Prime office rents for upper floors in skyscrapers (as of Q2 2017)
 Ranking
 Global City
Rent (US$ / sq ft / per annum)
% growth in six months to Q2 2017*
Rent (US$ / sq m/ per annum)
1
Hong Kong
$304
1.1%
$3,273
2
New York (Manhattan)
$162
1.8%
$1,742
3
Tokyo
$140
0.0%
$1,502
4
San Francisco
$117
3.5%
$1,259
5
London (City)
$110
0.0%
$1,187
6
Sydney
$107
3.4%
$1,149
7
Boston
$77
0.0%
$829
8
Shanghai
$67
-3.9%
$719
9
Singapore
$66
-0.9%
$711
10
Beijing
$66
7.6%
$710
11
Chicago
$62
1.6%
$667
12
Paris (La Défense)
$58
0.0%
$628
13
Toronto
$58
11.9%
$620
15
Melbourne
$56
4.6%
$608
16
Mumbai
$56
1.8%
$607
14
Frankfurt
$54
0.0%
$582
17
Los Angeles
$45
-2.2%
$484
18
Dubai
$44
0.0%
$469
19
Taipei
$41
0.0%
$442
20
Madrid
$39
0.0%
$424
22
Manila
$33
0.0%
$356
21
Seoul
$30
0.0%
$324
23
Kuala Lumpur
$23
-0.8%
$250
* Excludes exchange rate effects; conversion to US$ based on 30 June 2017 rates
Source: Knight Frank, Newmark Knight Frank, Sumitomo Mitsui Trust Research Institute
Note: Upper floors is defined as above the regular skyline, thus offering panoramic views, but excluding the very top floors.
END
 
 
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For further information, please contact:
Nicholas Holt, Asia-Pacific Head of Research
nicholas.holt@asia.knightfrank.com+86 10 6113 8030 @nholtKF
Rachel Loke, Asia-Pacific Head of Marketing, Communications & Digital
rachel.loke@asia.knightfrank.com+65 6429 3587 @knightfrank
Ms Seline Soo, Marketing & Communications Manager, Knight Frank Malaysia
seline.soo@my.knightfrank.com +603 2289 9669 @KnightFrank_my
 
 
Notes to Editors
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 14,000 people operating from 413 offices across 60 countries. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit knightfrank.com.
 
Knight Frank has a strong presence in Malaysia with its headquarters in Kuala Lumpur as well as branches in Penang, Johor and Kota Kinabalu. The company offers high-quality professional advice and solutions across a comprehensive portfolio of property services and is registered with the Board of Valuers, Appraisers and Estate Agents. The Company is licensed to undertake property, valuations / consultancy, estate agency and property management and is also on the panel of all leading banks and financial institutions. For further information about the Company, please visit KnightFrank.com.my