Traditional business centres being challenged by Asian office rental growth
Offices in leading cities in Asia have risen rapidly up the rankings of global office rents in the last five years, according to new research from Knight Frank.
Hong Kong now has the most expensive office rents in the world. London’s West End is in second place, falling from the first place it occupied in 2007, with Moscow third, Tokyo fourth and Paris five.
Knight Frank says that the traditional business centres retain their global status despite the recession. However Asian locations are catching up. Beijing has been the biggest riser in the last five years, moving from 25th place in 2007 to 12 in 2012.
‘In a startling leap up the rankings, Beijing has moved from 25th to 12th place, increasing the likelihood of the Chinese capital entering the top 10 this year. Singapore has also continued its inexorable rise among the leading global office markets,’ said Tony Nicholas, head of Knight Frank’s Global Corporate Services.
‘London’s West End and Paris confirmed their positions as perennial locations in the global economy hanging on to second and fifth places. The West End has a hefty lead over Moscow in third place so it is unlikely to be overtaken in the next study. In fact, with a vacancy rate of 5.6%, we expect further growth in famous postcodes such as Mayfair and St James, so London might close the gap on Hong Kong in 2013,’ he explained.
Knight Frank’s forecasts predict further growth in rents among China’s leading cities but sees potential in the German office market where it looks competitively priced with only one city, Frankfurt, in the top 20.
North America’s cities performed well in 2012, with San Francisco moving up six spaces from 2011 to 2012 with growth driven by technology companies. Manhattan also saw improvement, jumping five places to 10th place.
‘The overall picture on global rents is mixed, growth in Beijing and Manhattan, little change in London and Frankfurt. Global corporations in 2012 were anxious to avoid unnecessary expenditure, which meant less office moves and hard discussions on rents,’ said Nicholas.
‘In 2013, a recovering global economy, and constrained development activity in most major cities will result in more relocations,’ he added.
Other performances of note include Geneva, which saw its position elevated by nine places in the last five years in part because of the inflationary effect of the strong Swiss Franc, and Perth, which sits at the heart of Australia’s raw materials boom.
