London leads world in office costs
29 May 08
London's West End remains the world's most expensive office market in spite of rapid gains in prices in emerging economies such as Russia, India and Vietnam
London's Mayfair held on to its position as the most expensive place to set up an office, with costs rising to about £151 ($300, €190) per sq ft in the year to March 31.
Other traditional office locations such as inner central and outer central Tokyo were also in the top five most pricey markets, according to a report by CB Richard Ellis, the property services company.
But the real surprise came from the emerging economies such as Vietnam, where Ho Chi Minh City posted the fastest-growing occupancy costs during the period, up 94 per cent.
The Moscow market showed similar increases in office costs of 93 per cent to £116.90 per sq ft, making it the second most expensive city for office space, up from sixth place last time.
"Cost increases are dominated by emerging markets, caused by both supply and demand imbalance and the depreciation of the dollar relative to local currencies," said Raymond Torto, CBRE's global chief economist.
Dr Torto said there were "pioneer occupiers" looking to leave traditional manufacturing countries such as China for those with lower costs, such as Vietnam and the Philippines.
"Offices are the canary for the economy - if there is demand for offices, then generally there is demand for hotels, residential and all other areas of property," he added.
Singapore and Dubai were both newcomers to the top 10. India, with its rapidly growing economy and limited supply of offices, now has two cities in the top 10, Mumbai and New Delhi.
The City of London appears relatively cheap on a global basis, with the sixth most expensive occupancy at £82.6 per sq ft.
Midtown Manhattan is still the priciest market in North America, at £52 per sq ft ranked 13th worldwide.
The CBRE global market rents survey covers 173 cities, basing occupancy costs on rent, plus local taxes and service charges. The cost has been adjusted to reflect different measurement practices from market to market.
Top Ten Most Expensive Markets
- London (West End), England
- Moscow, Russia
- Tokyo (Inner Central), Japan
- Mumbai, India
- Tokyo (Outer Central), Japan
- London (City), England
- New Delhi, India
- Paris, France
- Singapore
- Dubai, United Arab Emirates
Top Ten Markets with Fastest Growing Occupancy Costs
- Ho Chi Minh City, Vietnam
- Moscow, Russia
- Singapore
- Nicosia, Cyprus
- Oslo, Norway
- Tel Aviv, Israel
- Dubai, United Arab Emirates
- Mumbai, India
- Manila, Philippines
- Perth, Australia
To read the full report, click here