London’s West End is the most expensive office market in the world for the first time since 2008 after regaining its number one spot from Hong Kong. The findings are included in Cushman & Wakefield’s Office Space Across the World 2013 report, which says a lack of quality stock has driven rents up by 2 per cent in the past year.
Cushman & Wakefield expects West End rents to rise higher still as the market enters the recovery phase, consolidating London’s position as the costliest international location to rent office space. Hong Kong dropped to second place in the table, while the rise of Rio de Janeiro from eighth place to third highlights the continuing growth of the Brazilian economy.
Overall, the global office market saw a 3 per cent rise during 2012 despite many markets continuing to underperform due to continuing economic difficulties. The report expects this two tier market to continue until the economic outlook improves.
Consequently gateway cities like London, Hong Kong and New York will continue to command high rents alongside cities in the emerging South American and Asian markets.
London aside, rental growth in Western Europe was sluggish, registering a rise of just 0.3 per cent. Eastern Europe fared rather better with rents increasing by 2 per cent overall. The most notable rises were in Kazakhstan and Turkey which witnessed rental increases of 22 per cent and 13 per cent respectively.
In North America prime rents rose by 9 per cent but the report states that this can be attributed to the strong performance of a few stand out markets like San Francisco and Calgary which saw rises of 19 per cent and 29 per cent due to demand from the energy and technology sectors.
Despite these increases, New York is the only North American city with a top ten ranking, occupying eighth spot, a fall of one place from last year.
Slower economic growth had an impact on the Asia Pacific market, restricting rent rises to 3 per cent. However Tokyo and Beijing join Hong Kong in the top ten highlighting their status as global economic centres.
Other cities posting significant rental rises include New Delhi in India and Jakarta in Indonesia where rents rose by 25 per cent and a hugely impressive 46 per cent.
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