JLL: Hong Kong office renovation costs ranked fourth in the Asia-Pacific region in 2024.

Jones Lang LaSalle (JLL) latest publication, "2025 Global Office Fit-Out Cost Guide," shows that in 2024, the average design and construction cost of office buildings in Hong Kong remained stable at an average of $133 per square foot (approximately HK$1040 per square foot), ranking 28th among major cities worldwide and 4th in the Asia Pacific region, only behind Tokyo, Singapore, and Sydney. Vincent Wong, head of project development services at Jones Lang LaSalle (JLL) Hong Kong, stated that despite an increase in labor costs last year, the cost of materials remained stable and competition in construction projects intensified, leading to the stability of design and construction costs of office buildings in Hong Kong. With a reduction in renovation projects from the beginning of this year until now, market competition has further intensified, with engineering companies willing to lower their bidding prices to win projects. It is expected that this trend will continue into the second half of the year, and the design and construction costs for 2025 are expected to decrease significantly compared to last year. According to a survey by Jones Lang LaSalle (JLL), as office buildings once again become a key asset in the commercial real estate market, companies in the Asia Pacific region are leading globally in their willingness to increase investment in renovation. In India and Australia, 74% and 72% of companies respectively plan to increase their investment in space design and renovation in the next five years, far exceeding the global average of 59%. Martin Hinge, Executive Director of Project Development at Jones Lang LaSalle (JLL) Asia Pacific, mentioned that the average renovation cost of office buildings in the Asia Pacific region is $136 per square foot, the lowest globally. While still competitive compared to other regions, companies are increasingly focusing on integrating technology and hybrid office models, which has led to an increase in investment in high-quality office space. The demand for sustainable development solutions and flexible office layouts in the region is also growing. It is noteworthy that investment in audiovisual and technology equipment in the Asia Pacific region is higher than in other regions, reflecting the increasing emphasis on technology applications by companies to improve efficiency and support hybrid office models. Additionally, aside from Latin America, construction costs are generally the highest proportion of renovation costs worldwide. The continued high demand for Grade A office buildings is shifting market focus towards existing office buildings and their long-term value to tenants and owners. Globally, 66% of companies plan to increase investment in sustainable development performance in the next five years. While mechanical and electrical services account for a higher cost in sustainable renovations (26% in the Asia Pacific region), such upfront investments can bring the most significant long-term cost savings. According to Jones Lang LaSalle (JLL) research, depending on the level of investment or upgrade, investing in mechanical and electrical equipment upgrades can save 10% to 40% in operating energy costs. With the supply-demand gap for Grade A office buildings expected to widen further, the market will focus more on lease extensions and upgrading existing leasing space and properties as alternative solutions. Jones Lang LaSalle (JLL) also anticipates that as supply remains tight, there will be more suitable renovation projects in the Asia Pacific region. In the current uncertain economic and geopolitical environment, early planning of lease arrangements and decisive investment in existing properties by owners and tenants will be more beneficial for proper budgeting and managing related costs.