Hong Kong, London and Tokyo have most expensive offices in the world
|Tuesday, 18 December 2012|
Hong Kong Central is the world’s most expensive business location ahead of London and Tokyo, according to the latest Prime Office Occupancy Cost survey from property firm CBRE.
Its global research and consultancy team’s reports shows that Asia Pacific now dominates the top ten. But it is San Francisco that has been the strongest with a year on year increase in prime occupancy costs of 36.4% driven by the technology sector.
At the top Hong Kong Central led with overall occupancy costs of US$246.30 per square foot, followed by the West End of London at US$219.81. Tokyo was the third followed by Beijing’s CBD and New Delhi’s CBD. Other Asia-Pacific markets in the top ten include Beijing-Finance Street in sixth and Hong Kong-West Kowloon in seventh.
Despite economic headwinds, occupancy costs increased by an average of 2.1% worldwide over the past year, led by the Americas with a 5.2% annual increase and Asia Pacific with a 2.6% increase. Europe, the Middle East and Africa continued to be hindered by economic recession in much of Europe and recorded a 0.4% decrease in prime occupancy costs. Prime office occupancy costs increased in 74 markets, decreased in 37 office markets and had no change in 22 markets.
‘The global office market recovery cooled over the past year, hampered by the ongoing European debt crisis, a deceleration of growth in emerging markets and ubiquitous uncertainty created by the fiscal cliff in the US,’ said Raymond Torto, CBRE’s global chief economist.
‘However, tight market conditions, strong demand for high quality space and low levels of new construction continue to drive up occupancy costs in many prime office markets across the globe,’ he added.
CBRE tracks occupancy costs for prime office space in 133 markets around the globe. Of the top 50 most expensive markets, 19 are in EMEA, 18 are in Asia-Pacific and 13 in the Americas.
North America is led by New York’s Midtown, which posted an office occupancy cost of US$114.30 per square foot on the strength of a 7.3% year on year increase. The New York Midtown market was ranked 16th globally.
San Francisco (Downtown) experienced the largest year on year increase, at 36.4%, of the 133 markets tracked with an occupancy cost of $90.00 per square foot. San Francisco’s Peninsula market was not far behind, rising 28.6% to reach $62.10 per square foot.
In Latin America, São Paulo remains the most expensive market, posting an office occupancy cost of US$130.07 per square foot and ranks as the 10th most expensive market globally. Meanwhile, with an occupancy cost of $121.40 per square foot, Rio de Janeiro is also in the top 12.
Continuing economic contraction in the Eurozone led to double digit or near double digit declines in prime occupancy costs in Thessaloniki and Athens in Greece, and Malaga in Spain, as business sentiment suffered and occupiers remained cautious. Subdued demand also led to occupancy cost declines in Portugal and Ireland.
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