London has lost its status as the world's most expensive office location for the first time in nine years. According to the new Office Space Across the World 2009 report from global real estate advisor Cushman & Wakefield, Hong Kong and Tokyo are now the world's two most expensive locations relegating London to third place. The cost of occupying a prime square metre of office per year in Hong Kong now stands at EUR 1,743.
London has lost its status as the world's most expensive office location for the first time in nine years. According to the new Office Space Across the World 2009 report from global real estate advisor Cushman & Wakefield, Hong Kong and Tokyo are now the world's two most expensive locations relegating London to third place. The cost of occupying a prime square metre of office per year in Hong Kong now stands at EUR 1,743.
Although rents in Hong Kong actually fell 4% in 2008, the much larger 23% fall in London's West End pushed occupancy costs down further to EUR 1,403 per m2 per annum. The cost of space in Tokyo now stands at EUR 1,649 per m2 per annum, a fall of 19% in 2008.
Office Space Across the World 2009 compares office occupancy costs in 202 key locations in 57 countries around the world. Of these 202 locations, 58% showed rental growth in 2008, 26% saw stable rents and 16% showed a rental fall (compared with only 1% in 2007). Office rents globally rose on average by 3%, significantly below the 14% achieved in 2007 and the lowest growth rate since 2004.
South America was the best performing region with rental growth averaging 12% for the year. Western Europe was the poorest performing region with average rental growth of only 1%.
The impact of the global economic downturn has been felt in all markets although some were better placed to withstand declining occupier demand for space. The expansion of financial institutions, particularly the hedge funds, have driven up rents in London's most prestigious West End market for the last few years but it has now felt the full impact of the credit and banking crisis. The fall in rents and weak UK currency, however, means that for overseas companies, London is now more affordable than it has been in years.
Dublin has fallen out of the top 10 for the first time in three years. It is down to 15th position from ninth with annual occupancy costs standing at EUR 620 per m2; this includes a decline in rents of 13%. Dubai, however, has risen from eighth to fifth place with rents increasing by 7%. Damascus in Syria is a new entry for 2009 at number eight.
