Office fit-out costs up 10.8% y-o-y in APAC amid labour, materials shortage: JLL

REFLECTING the prevailing shortage in labour and raw materials, the average cost of designing and building workspaces has risen 10.8 per cent year on year across the Asia-Pacific region.

In a report on Thursday (Nov 25), global real estate company JLL projected that the cost to fit out an office will likely go up even more over the next 12 months, particularly in some markets in China, India and South-east Asia.

According to its Asia-Pacific fit-out cost guide for 2021/2022, JLL - which surveyed costs from 31 cities in the region - said the average fit-out cost per square metre (sqm) now stands at US$1,109.

The guide measures costs based on a standard fit-out project, drawing reference from the progressive fit-out of JLL's Singapore office at Paya Lebar Quarter. JLL noted that its office is "Grade A" in the Singapore market.

Tokyo leads the way for the fifth year running in its books as the most expensive place to fit out an office. The same job would cost US$1,902 per sqm there.

All 7 Australian cities, which the company tracks, trail behind, recording fit-out costs of between US$1,523 and US$1,772 per sqm.

Singapore came in at 10th place on its list, with a cost of US$1,267 per sqm, while the Indian city of Ahmedabad is the cheapest market, with a cost of US$669 per sqm.

Noting that the overall jump in fit-out costs is "significant", Martin Hinge, executive managing director of project development services at JLL Asia Pacific, said cities that rely heavily on foreign labour and imported materials are the most affected.

He added that it is "highly probable" price increases will sustain across the region, given continued restrictions around the deployment of labour, and the need to seek alternative and potentially more expensive materials.

JLL attributed the price increases in most markets to direct implications of the Covid-19 pandemic - supply chain disruptions, labour shortages, material availability, and the rising cost of raw materials.

Despite rising costs, Hinge pointed out that office design will continue to feature strongly on many companies' agenda in the year ahead.

According to the report, the top 3 areas which business leaders have earmarked for further investment in 2022 are technology and audio-visual tools; mechanical and electrical facilities, such as sensors and filtration; and sustainability features, for example, rooftop gardens, indoor greenery and water conservation.

"Building an office in a sustainable and responsible way creates upfront value for companies," Hinge said.

"Not only can they decrease operational costs by driving energy efficiency, they can create a more productive and conducive work environment to win in the war for talent."