World’s Most expensive office markets
Mumbai dropped to 7th position and Delhi moved up to 10th position, as per a CBRE report
While Mumbai dropped one more place to 7th position and Delhi moved up from 12th to 10th position, London (West End) reclaimed its position as the world’s most expensive office market according to CB Richard Ellis Group, Inc. (CBRE’s) Global Research and Consulting’s semi-annual Global Office Rents survey.
Tokyo’s Inner Central, which was at number 1 in May this year has slipped to second place, followed by that city’s Outer Central market. Hong Kong’s Central Business District (CBD) and Moscow are fourth and fifth respectively in the CBRE report, which tracks office occupancy costs in nearly 180 cities around the globe.
Anshuman Magazine, Chairman & Managing Director, CB Richard Ellis South Asia says, While Mumbai continues to remain in the top ten (having dropped from 6th to 7th position) Delhi has re-joined the top 10 ranking (moving up from 12th to 10th position) of most expensive office markets, after two years.
Although the rentals in the Delhi CBD have remained stable for the past 6 months, it has moved up to the 10th position primarily due to other global cities declining significantly in office rentals. From the third quarter of 2009 onwards we have seen corporates coming back into the market and office space take-up has improved. To reduce office occupancy costs further and facilitate more supply of office space we need to urgently improve our infrastructure and amenities. This would bring our world rankings down further and make India more competitive.”
Office markets worldwide are experiencing declines in prime office occupancy costs. The year-over-year change in prime office occupancy costs of the 179 markets monitored revealed an average drop of 7.7% worldwide over the 12-month period ending September 30, 2009 (in local currency and on an un-weighted average basis). The majority of markets – 131 markets in total – experienced a year-over-year decline including nearly 50 which saw rents tumble by double-digit percentage-points.
Many of the world’s bellwether financial centers are at the top of the list of fastest changing markets, including Hong Kong Central CBD (-40.7%) and New York, Midtown (-29.7%) along with emerging markets such as Ho Chi Minh City (-45.4%) and Abu Dhabi (-38.6%). Kiev led the world with the largest year-over-year decrease in office occupancy costs, falling 64.6% from year-ago levels.
“While there are signs that commercial real estate values are stabilizing in some markets in Asia and parts of London, underlying property fundamentals are still weak,” said Dr. Raymond Torto, CBRE’s Global Chief Economist. ”However the office market may be on the cusp of moving from intensive care to the stabilization stage – the first step to getting back to good health.”
Forty-one markets experienced positive growth. Aberdeen, Scotland and Rio de Janeiro, Brazil both grew by more than 10% as not all markets have been as affected by the decline in global demand and demand for office space has proven resilient in some areas due to the local market dynamics.
Office occupancy costs measured in U.S. dollars are affected by changes in the dollar’s value versus the respective local currency. Hence, office occupancy costs when converted into U.S. dollars are driven by both the local market dynamics of supply and demand, as well as currency changes.
Tokyo (Inner Central) was Asia’s most expensive market with an occupancy cost of $172 per sq. ft. while that city’s Outer Circle market was second with occupancy costs of $139 per sq. ft. Hong Kong (CBD) follows with occupancy costs of $138 per sq. ft. Mumbai and New Delhi were the other two Asia-Pacific markets in the world’s top 10 most expensive cities roster.
For the Asia Pacific region, the office markets that experienced the largest decreases include Singapore (-53.4%), Ho Chi Minh City (-45.4%), as well Hong Kong which declined over 30% in the past year. The Asia-Pacific region had 17 cities with double-digit declines in office occupancy costs.
London’s West End was the world’s most expensive office market at $185 per sq. ft. Moscow was second in Europe with occupancy costs at $132 per sq. ft. Dubai, Paris and the City of London all were in the top ten most expensive markets.
Kiev led the world with the largest year-over-year decrease in office occupancy costs, falling 64.6% from year-ago levels. Other markets in Europe that are experiencing the largest decreases include Moscow, Oslo, Warsaw and Dublin. The EMEA region had 17 cities with double-digit declines in office occupancy costs.
Two cities in Brazil — Rio de Janeiro and São Paolo — have supplanted New York’s Midtown as the most expensive office location in the Americas. Rio de Janeiro’s occupancy costs of $87 per sq. ft., was good for twelfth place on the global list, while São Paulo came in at 16th globally with occupancy averaging $82 per sq. ft. New York’s Midtown’s market has dropped to third in the Americas and 24th globally with occupancy costs of $69 per sq. ft.
Boston’s CBD led the Americas, with a decline of 33.9% year-over-year, followed by New York’s Downtown and Midtown markets. Fifteen markets in North America posted double-digit declines. Meanwhile, Latin America held up stronger than the rest of the world, with only six cities registering a decline, including a 6.3% decrease in Buenos Aires, Argentina.
Courtesy: CB Richard Ellis