HONG KONG, 27 January 2005 — Hong Kong has risen 12 places up a table of the most costly cities to lease office space, with rents the fifth most expensive in the world, a new survey revealed yesterday. Office rentals more than doubled — up 109 percent — in the past year to 637 euros ($829) per square meter, according to a survey by international real estate firm Cushman and Wakefield.

London was rated the most expensive with rentals of 1,571 euros a square meter, followed by Paris (945), Tokyo (723) and mid-town Manhattan (680). A spokesman for the company attributed the rise to prestigious new developments that have opened in the Chinese-ruled former British colony.

Meanwhile, the Hong Kong government published a commentary in six local newspapers yesterday rejecting claims that it made shady deals with big business in the development of an ill-fated high-tech business park. The row has further fueled growing suspicions here that the southern Chinese enclave’s Beijing-selected government is in collusion with local tycoons, handing them the most lucrative public contracts.

In the commentary, technology secretary John Tsang defended the government’s decision to award the Cyberport project without a formal tendering process to telecom giant PCCW, a company owned by Richard Li, son of local tycoon Li Ka-shing, Asia’s richest man. Tsang said PCCW was awarded the contract because the company could ensure the project would be completed “within the shortest possible” time to cash in on the late-90s dotcom boom.

He said speed was important as similar projects had already been built in neighboring rivals. However, the tech bubble burst as construction of Cyberport got under way in 2000 and controversy has surrounded it ever since. Some critics have accused the government of bypassing the legislature (LegCo) to get the project moving and others said the prime piece of sea view real estate was a giveaway of a lucrative public asset to the powerful Li family.

The deal allowed PCCW to defray the land-cost repayments — estimated at 15 billion dollars ($2 billion) — until the project began making money. So far 1.67 billion dollars have been paid to government coffers, mainly earned from sales of luxury flats. Tsang countered criticism that the industrial park plan was a smokescreen to build a lucrative residential project, saying the mixed-use model was vital to finance the 24-hectare (60-acre) plot.

He describe as “outrageous allegations” claims that Cyberport was an example of “collusion” between government and business. “The PPP (public-private partnership) model would ensure that the Cyberport portion could be completed in the shortest possible time and that the government would receive a reasonable return while its risks involved in the project development would be minimized,” he wrote.