Office Fit Out Costs Continue to Rise Across Asia Pacific, Albeit at a Much Slower Rate

While inflation has started to ease in some markets, concerns about the interest rate environment, supply chain issues and geo-political tensions remain prevalent although there is hope for an economic rebound in the second half of 2024.

Cushman & Wakefield also note in the report that creating a workplace that enables employees to be at their most productive, and that promotes wellbeing and helps achieve corporate sustainability and inclusivity goals, remains high on the agenda for occupiers even as they grapple with cost challenges and increased scrutiny on the quality of spend. These key considerations, broadly categorized as the 3Cs - Cost, Carbon and Culture – continue to shape companies' strategies for the future of work.

Head of International Research and co-author of the report Dr Dominic Brown said, "The percentage rise in office fit out costs across Asia Pacific has eased significantly at 2% in both US dollar and local currency terms compared to 18% (local currency) and 7% (USD) a year ago. This is primarily due to the decline in raw materials costs and the easing of inflation and supply chain pressures. However, the recent shipping crisis in the Red Sea is disrupting global supply chains again and increasing freight costs, which will have an impact in due course."

North Asia and Australia/New Zealand continued to feature prominently in the 2024 APAC cost rankings. Tokyo, Osaka and Nagoya remained the top three most expensive markets to fit out in a 'Collaborative Hybrid'[1] style, followed by Canberra (Australia) and Auckland (New Zealand). Within Greater China, Hong Kong is the only city to feature inside the top ten cost listing.

Top 10 most expensive locations for a collaborative hybrid fit out in Asia Pacific.

RANK	CITY	AVERAGE COST (USD PSF)
1	Tokyo	199
2	Osaka	195
3	Nagoya	191
4	Canberra	172
5	Auckland	158
6	Seoul	156
7	Sydney	153
8	Melbourne	150
9	Hong Kong	147
10	Brisbane	146

David Shi, Managing Director, Head of Project & Development Services, China, Cushman & Wakefield, said, "In Greater China we are seeing a growing emphasis on sustainability and smart office technologies, mirroring global trends. Occupiers are increasingly investing in fit outs that enhance employee wellbeing and foster collaboration. In terms of costs, the 2024 report shows that six Greater China markets are ranked in the top 20 most expensive office fit-out markets in Asia-Pacific. Hong Kong remains the costliest market in Greater China, followed by Taipei, Beijing, Shenzhen, Shanghai and Guangzhou."

Top six most expensive locations for a collaborative hybrid fit out in Greater China.

RANK	CITY	Basic (USD PSF)	Collaborative (USD PSF)	Advanced (USD PSF)
1	Hong Kong	96	147	237
2	Taipei	85	125	178
3	Beijing	78	110	180
4	Shenzhen	68	109	162
5	Shanghai	75	107	182
6	Guangzhou	65	103	152

Bryant Cheung, Executive Director, Head of Project & Development Services, Hong Kong, Cushman & Wakefield, added, "The variation in costs across Greater China cities reflects differing market conditions and local demand for high-quality office spaces. The higher costs in Hong Kong indicate the higher costs of office space and a focus on high-end fit outs."

Creating office value comes to the fore amidst productivity and wellbeing concerns

Last year, Cushman & Wakefield noted that identifying the right office design that can balance working from home and having people in the office was the number one conversation in most markets across Asia Pacific. Today, this conversation remains important and in fact, has broadened to address other growing concerns such as lower productivity levels, lower sense of wellbeing[2], as well as net zero commitments and inclusivity goals.

Cushman & Wakefield's Asia Pacific Head of Project & Development Services, Tom Gibson said, "The evolving workplace landscape continues to present both challenges and opportunities to companies as they strive to maintain and enhance productivity, connectivity and employee well-being. Scrutiny on capital expenditure will always be tight and companies have to be smarter and more creative in their workplace and office fit out decisions. Now that the office serves as a hub for social interaction, community building and innovation, the type, size and layout of space, furniture and furnishing details, technology-enabled amenities plus other fit out elements have to embellish this new purpose."

Even as occupiers assess and rethink their space requirements while juggling cost, carbon and culture parameters, the flight to quality trend remains prominent with more companies opting for better quality buildings in business-strategic locations. The propensity to create destination offices that offer a workplace environment that is enticing enough to attract people into the office and compelling enough for them to repeat the experience is also expected to resonate even more.

Please click here to download the full report.

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About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In Greater China, a network of 23 offices serves local markets across the region. In 2023, the firm reported revenue of $9.5 billion across its core services of valuation, consulting, project & development services, capital markets, project & occupier services, industrial & logistics, retail and others. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), sustainability and more. For additional information, visit www.cushmanwakefield.com.hk or follow us on LinkedIn (https://www.linkedin.com/company/cushman-&-wakefield-greater-china).

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