Hong Kong, starved of space thanks to its boundaries set during colonial British rule, has the most skyscrapers in the world; it also has the most expensive skyscrapers. Its rents for prime office space are topping the charts globally, says Knight Frank, at $263.25 per square foot per year according to its 2016 Global Cities report.
But that's not necessarily good news. In fact, it could be a strong negative. Andrew Lawrence, then an analyst at Dresdner Kleinwort Wasserstein, designed a "Skyscraper Index" back in 1999 that demonstrated that the city with the tallest skyscraper at the time was more than likely at the exploding point of its property bubble.
There's been some analysis of that "rule" and while it does not always strictly hold true, there is no doubt that constructing extremely tall buildings is a sign of a certain amount of excess. Either your city is at its limits in terms of space, or you're looking to show off, or both.
There are good reasons for property investors to look elsewhere. The high rents in Hong Kong have driven yields for prime office property down to 2.9%, according to the Knight Frank report. That is the lowest among major cities.
That's bad news for Asia's wealthy individuals. Private investors have bought $1 trillion in commercial real estate since the financial crisis, one-quarter of the amount invested in that sector. They're only becoming more influential as they gain experience.
This would also be bad news for Hong Kong's major developers, which are already under strain. They include Cheung Kong Holdings (HK:0001), which of course has a highly significant stock symbol. It was founded by Li Ka-shing, whom Forbes ranks as the second-richest person in Asia thanks to his $29.7 billion fortune.
Only Wang Jianglin, the founder of the mainland Chinese conglomerate Dalian Wanda, has more in his bank account, by quite some stretch at $34.8 billion. But his fortune was also originally generated by property.
Li has come under attack in the mainland media for selling out of several holdings in China. That, to some, is unpatriotic. But at heart he is a dealmaker and a trader, so it's no surprise to see him reposition some of his portfolio.
Chinese economic growth, as we all know, is slowing. The days of double-digit increases are long gone. Much of that money used to funnel through Hong Kong, greater China's financial capital, in one way or another.
Sentiment in Hong Kong has turned negative, and residential property prices have declined 12.6% since peaking in September last year, according to the Centa-City Index. That is compiled by Centaline, one of the major brokerages here.
It is property brokers, rather than developers, that are feeling the pinch the most. Centaline is still held privately. But Midland Holdings (HK:1200), the parent company of Midland Realty, is publically traded. Century 21, a brand that falls under Realogy (RLGY), and Engel & Volkers also have prominent local affiliates.
Jones Lang LaSalle (JLL) and competitors such as Savills and, of course, the skyscraper report authority Knight Frank are the managers of a lot of office space in the city. So any decline in property prices will hit them in the pocket as well.
According to the Council on Tall Buildings and Urban Habitat, greater China has essentially half (seven out of 15 to be exact) of the tallest skyscrapers in the world right now. Of course they won't come crashing down. Will their rents? We'll have to wait and see.