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London (West End) World’s Most Expensive Office Market; Hong Kong (CBD) Now Ranks Second

 

Los Angeles — May 5, 2010 — London’s West End remains the world’s most expensive office market, according to CB Richard Ellis Group, Inc. (CBRE) Global Research and Consulting’s semi-annual Global Office Rents survey. Hong Kong’s Central Business District (CBD) has risen to second place pushing Tokyo’s Inner Central to third place. Mumbai is now in fourth position on the list while Moscow remains in fifth in the CBRE rankings, which tracks occupancy costs for prime office space in 176 cities around the globe.   

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. 

“We have found that currency fluctuations play a big role with regard to where markets rank in the top 10 for office costs,” said Dr. Raymond Torto, CBRE’s Global Chief Economist. ”However, the ‘most expensive club’ still includes the usual names—London, Hong Kong and Tokyo.” 

The report also found that on a year-over-year basis, global occupancy costs are searching for a bottom, with the markets monitored revealing a collective drop of -4.6% worldwide over the 12-month period ending March 31, 2010.  Larger markets experienced a slightly greater decline of -6.4%.  "The majority of markets (116) experienced a decline, with 33 of these markets registering double-digit percentage-point drops in office occupancy costs.  53 markets experienced annual increases in occupancy costs, generally smaller markets affected by quality shifts in key market assets. 

“While economic data reflects improvements year-over-year, the commercial real estate market lags the economy, and our occupancy cost survey still shows falling costs,” added Dr. Torto.  “On a quarter-over-quarter basis, rental data in these markets is generally starting to show a bottoming, and in some locations, such as London, even an uptick.” 
It is also noteworthy that the Latin American Market—led by Brazil—was the only region to show an increase year over year in occupancy casts.  
Annual percent change calculations are based upon occupancy costs in local currency and measurement and not influenced by currency changes.

Asia-Pacific
Asia Pacific had 13 markets rank in the top 50 most expensive, with three of the top five most expensive markets. Hong Kong (Central CBD), with an occupancy cost of US$153.20 per sq. ft., was first in the region followed by Tokyo’s Inner Central, with an occupancy cost of US$143.99 per sq. ft. Mumbai, with an occupancy cost of US$125.76 per sq. ft., moved up into the top five global markets largely as a result of the recent appreciation of the Rupee to the U.S. dollar. 

The most expensive market in the global ranking from the Pacific Region was Perth (US$59.29), which came in at 35th, despite also experiencing the third largest decline in local currency, at -27%.  

Asia-Pacific had the largest collective occupancy cost decline with a drop of -9.2%, led by Singapore (-36.2%), Ho Chi Minh City (-30.9%), and Perth (-27.4%).  The region had four of the five global markets with the largest decreases and 18 out of 27 markets in Asia Pacific experienced declines year-over-year. However, the first part of 2010 has seen improved demand  for office space with several Asian markets seeing a rebound in rentals, most notable being Hong Kong’s Central CBD.  

Europe Middle East & Africa
EMEA continues to have the most markets on the top 50 list with 29 markets. London’s West End is still the world’s most expensive market with an occupancy cost of US$182.94 per sq. ft., despite the recent depreciation of the British pound to the U.S. dollar   Other markets in the region that top the list are Moscow (occupancy cost of US$125.10 per sq. ft.), Paris (US$113.23 per sq. ft.), London (City)(US$110.07 per sq. ft.) and Dubai (US$108.92 per sq. ft.).

Overall, the EMEA region had an annual decline of -6.2%, led by Moscow (-26.5%), Dublin

(-24.6%) and Abu Dhabi (-23.7%).  This region as a whole experienced 44 out of 57 markets with office occupancy costs falling.    

 

Americas

North America is led by Midtown New York, which posted an office occupancy cost of US$64.51 per sq. ft.  While office occupancy costs in Midtown New York are high for North America, that market ranked just 26th globally.  

North America saw a below-average decline of -3.3% (year-over-year), making the region the third weakest with falling occupancy costs in 51 out of 77 markets.  The largest declines were in Calgary CBD (-24.9) and New York Downtown (-19%). 

In Latin America, São Paulo moved ahead of Rio de Janeiro in ranking, posting Latin America’s highest office occupancy costs at US$100.00 per sq. ft. and is now ranked the 10th most expensive market globally marking the first time that market has been in the top ten.  This is a combination of the appreciation of the REAL against the U.S. dollar over the past year, the scarcity of new office product and the strength of the local office market.

Latin America is holding up better than the rest of the world and is the only region posting positive gains, with an average 3.4% increase.  Out of the 15 markets in the region, only three experienced declines.  The largest increases were in Brazil, in both Rio de Janeiro (17.7%) and São Paulo (15.9%).  In Brazil, recovery started in 2Q2009, so the annual change is reflective of the trough for the office market. In Rio de Janeiro and São Paulo, newly completed Class A+ space is contributing to rising office occupancy costs.   

 

Top Ten
Most Expensive Markets

 

Fastest Changing
Occupancy Costs

(In US$ per SF per annum)

1.) London West End, United Kingdom

2.) Hong Kong (Central CBD)

3.) Tokyo, (Inner Central), Japan

4.) Mumbai, India

5.) Moscow, Russian Federation

6.) Tokyo (Outer Central), Japan

7.) Paris Ile-de-France, France

8.) London City, United Kingdom

9.) Dubai, United Arab Emirates

10.) São Paulo, Brazil

 

 

US$/SF/annum

182.94

153.20

143.99

125.76

125.10

118.41

113.23

110.07

108.92

100.00

 

(In local currency & measure)
Top 5 Decreases

1.) Singapore, Singapore

2.) Ho Chi Minh City, Vietnam

3.) Perth, Australia

4.) Moscow, Russian Federation

5.) Tokyo, (Inner Central), Japan

 

Top 5 Increases

1.) Rio de Janeiro, Brazil

2.) São Paulo, Brazil

3.) Tel Aviv, Israel

4.) San Salvador, El Salvador

5.) Seoul (CBD), South Korea

 


% Change

-36.2

-30.9

-27.4

-26.5

-25.9

 

% Change

17.7

15.9

13.8

10.2

9.5

 

 

Note: The full Top 50 Most Expensive Markets chart is located at the end of this press release.

 

About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2009 revenue).  The Company has approximately 29,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. CB Richard Ellis has been named a BusinessWeek 50 “best in class” company for three years in a row. Please visit our Web site at www.cbre.com. 

Notes to Editors

  1. Global MarketView/Office Occupancy Costs is a survey of office occupation costs for prime office space in nearly 180 cities worldwide.
  2. The latest survey provides data on office rents and occupancy costs as of March 31, 2010
  3. The Fastest Changing rankings are based upon occupancy costs in local currency and measure. The Most Expensive ranking is based upon occupancy costs in US$ per sq. ft. per annum. 
  4. The figures given in this release refer to occupancy cost. This represents rent, plus local taxes and service charges. The occupation cost figures have also been adjusted to reflect different measurement practices from market to market.
  5. To obtain a full copy of the report or to arrange to speak with a CBRE expert, please contact Robert McGrath at 212.984.8267 or robert.mcgrath@cbre.com.

 
Top 50 Most Expensive Office Markets as of March 31, 2010  

 

Rank

Market

 US$/sq ft/annum

€ /sq m/annum

 £/sq ft/annum

Aus $/sq m/annum

Can$/sq ft/annum

¥  /sq ft/annum

1

London West End, United Kingdom

182.94

1457.59

120.50

2,148

185.72

17,098

2

Hong Kong (Central CBD)

153.20

1220.59

100.91

1,799

155.53

14,318

3

Tokyo, (Inner Central), Japan

143.99

1147.21

94.84

1,691

146.18

13,457

4

Mumbai, India

125.76

1002.01

82.84

1,477

127.67

11,754

5

Moscow, Russian Federation

125.10

996.74

82.40

1,469

127.00

11,692

6

Tokyo (Outer Central), Japan

118.41

943.43

77.99

1,391

120.21

11,067

7

Paris Ile-de-France, France

113.23

902.15

74.58

1,330

114.95

10,582

8

London City, United Kingdom

110.07

876.98

72.50

1,293

111.74

10,287

9

Dubai, United Arab Emirates

108.92

867.84

71.75

1,279

110.58

10,180

10

São Paulo, Brazil

100.00

796.74

65.87

1,174

101.52

9,346

11

New Delhi, India

96.90

772.08

63.83

1,138

98.38

9,057

12

Rio de Janeiro, Brazil

95.63

761.93

62.99

1,123

97.08

8,938

13

Luxembourg City, Luxembourg

81.84

652.07

53.91

961

83.09

7,649

14

Hong Kong (Citywide)

80.27

639.58

52.87

943

81.49

7,502

15

Geneva, Switzerland

80.25

639.38

52.86

942

81.47

7,500

16

Zurich, Switzerland

78.48

625.32

51.70

922

79.68

7,335

17

Istanbul, Turkey

78.44

624.96

51.67

921

79.63

7,331

18

Milan, Italy

77.93

620.88

51.33

915

79.11

7,283

19

Abu Dhabi, United Arab Emirates

72.71

579.28

47.89

854

73.81

6,795

20

Seoul (CBD), South Korea

71.82

572.24

47.31

843

72.91

6,712

21

Frankfurt am Main, Germany

69.64

554.84

45.87

818

70.70

6,508

22

Edinburgh, United Kingdom

67.56

538.28

44.50

793

68.59

6,314

23

Manchester, United Kingdom

67.56

538.28

44.50

793

68.59

6,314

24

Dublin, Ireland

67.02

534.00

44.15

787

68.04

6,264

25

Stockholm, Sweden

65.68

523.33

43.26

771

66.68

6,139

26

New York  Midtown, U.S.

64.51

513.98

42.49

758

65.49

6,029

27

Birmingham, United Kingdom

63.76

508.04

42.00

749

64.73

5,959

28

Rome, Italy

63.45

505.49

41.79

745

64.41

5,930

29

Gothenburg, Sweden

62.31

496.48

41.04

732

63.26

5,824

30

Athens, Greece

61.46

489.68

40.48

722

62.39

5,744

31

Glasgow, United Kingdom

60.73

483.85

40.00

713

61.65

5,676

32

Madrid, Spain

60.69

483.53

39.97

713

61.61

5,672

33

Shanghai (Pudong), China

60.14

479.16

39.61

706

61.05

5,621

34

Toronto (CBD), Canada

59.86

476.93

39.43

703

60.77

5,595

35

Perth, Australia

59.29

472.42

39.06

696

60.19

5,542

36

Aberdeen, United Kingdom

59.21

471.75

39.00

695

60.11

5,534

37

Singapore, Singapore

57.49

458.05

37.87

675

58.36

5,373

38

Oslo, Norway

57.20

455.76

37.68

672

58.07

5,346

39

Vancouver (CBD), Canada

55.49

442.09

36.55

652

56.33

5,186

40

Leeds, United Kingdom

54.66

435.46

36.00

642

55.49

5,108

41

Munich, Germany

54.62

435.16

35.98

641

55.45

5,105

42

Sydney (Core), Australia

53.29

424.58

35.10

626

54.10

4,980

43

Shanghai (Puxi), China

52.96

421.95

34.88

622

53.76

4,950

44

Buenos Aires, Argentina

52.02

414.47

34.26

611

52.81

4,862

45

Washington, DC (CBD), U.S.

51.75

412.31

34.09

608

52.54

4,837

46

Tel Aviv, Israel

51.56

410.81

33.96

605

52.34

4,819

47

Jersey, United Kingdom

51.24

408.25

33.75

602

52.02

4,789

48

Beijing, China

51.08

407.00

33.65

600

51.86

4,774

49

Calgary (CBD), Canada

50.92

405.67

33.54

598

51.69

4,759

50

Amsterdam, Netherlands

50.32

400.91

33.14

591

51.08

4,703

 

 Source: CB Richard Ellis Global Research and Consulting

 

 

 

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