Commercial space in skyscrapers here are 10 times cheaper than Hong Kong: Report
Residential property prices in Dubai have risen by over 24 per cent in the year to March 2014, but commercial properties in skyscrapers (the upper most floors) in the emirate are still far more affordable that global cities such as Hong Kong, London, Los Angeles and Mumbai.
Capital values of commercial real estate in Dubai’s skyscrapers are almost 10 times cheaper than Hong Kong, which Knight Frank Skyscraper Index puts as the most expensive skyscraper city for commercial properties.
The capital value for skyscrapers in Dubai stands at $620 per square feet (psf) compared to $6,330 psf in Hong Kong, $4,180 psf in Tokyo, $2,400 psf in London, $1,230 psf in Los Angeles and $780 psf in Mumbai.
Emporis data reveals that Dubai has 464 skyscrapers (pure commercial, pure residential and mixed use), which includes Burj Khalifa, the world’s tallest tower while Hong Kong has 1,352 skyscrapers.
Capital value in Burj Khalifa rose by 27 per cent in the year to June 2013, Knight Frank had said.
“Prices increased by 40 per cent briefly at the peak of the market but then dropped top below the off plan prices for the following four years until regaining their original value in Q2 2013,” the consultancy had said.
On the residential apartments of Burj Khalifa, Cluttons, a real estate consultancy, said prices of apartments had risen 25 per cent in 2013, while a review of prices over the past four years revealed residential units rising by 13.6 per cent since handing over of the units in January 2010. In 2014, the prices are up, again.
According to Knight Frank, Hong Kong’s large lead in the index can be attributed to factors such as the restricted geographic area of the city which results in developers having to convert air into “land” and build upwards.
“Skyscrapers are the Lamborghinis of the office world, as investors pay more to own these prestige and high quality buildings,” says Khawar Khan, research manager, Knight Frank, UAE.
“Upper floors in skyscrapers command higher rents compared to office space in low rise buildings, due to the ‘ego appeal’ of having an office that towers over competitors. Also, the panoramic views are a strong marketing tool, as a client can be taken into a meeting room offering an aeroplane perspective on the city below. Thus, the premium rents on offer justify the high prices investors will pay to own such a property.”
Primarily, financial and professional firms have been the main occupants of skyscrapers though in recent years a wider range of firms are taking up space in high-rises.
In Europe, London comes out on top, with capital values valued at more than double those in Paris or Frankfurt. London ranked fifth back in the spring, and the rise shows investor confidence in the future prospects of the UK capital’s office market, with its new wave of skyscrapers, Knight Frank said.