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CBRE Finds Hong Kong-CBD World’s Most Expensive Office Market; London-West End Follows; Tokyo Third

Six of the Top Ten ‘Most Expensive’ Markets in Asia-Pacific as Emerging Economies Attract Occupiers

Occupancy Costs Increase 3.6% Worldwide From Year Ago
Los Angeles — July 16, 2012 — Asia-Pacific holds increasing sway in the global commercial real estate market, as Hong Kong-CBD was the world’s most expensive office market and the region accounted for six of the top 10 most expensive markets worldwide, according to CBRE Global Research and Consulting’s semi-annual Prime Office Occupancy Costs survey. Asia-Pacific also accounted for the market with the strongest growth in occupancy costs, as Beijing’s Jianguomen-CBD saw costs rise 49.4% over the past year, CBRE found. 
 
Hong Kong’s CBD led the “most expensive” list with overall occupancy costs of US$248.83 per sq. ft. This topped London’s West End, which, despite a 4.7% year-over-year increase, had total occupancy costs of US$220.15. Tokyo’s was the third most expensive market for office space, followed by Beijing’s Jianguomen (CBD) and Moscow. Other Asia-Pacific markets in the top ten include Beijing-Finance Street (6th), Hong Kong-West Kowloon and New Delhi-Connaught Place, CBD (9th).  
CBRE tracks occupancy costs for prime office space in 133 markets around the globe. Of the top 50 ‘most expensive’ markets 19 are in Asia-Pacific, 19 are in EMEA and 12 in the Americas. 
  
 
“The most expensive office locales are increasingly located in dynamic markets across the emerging economies as office occupiers diversify their global footprints in these markets to take advantage of rising incomes and the availability of labor,” said Dr. Raymond Torto, CBRE’s Global Chief Economist. ”The most expensive office occupier markets also have a diversified economic base; limited, available institutional quality space; strong currencies and are increasingly located in urban centers.” 
Occupancy costs increased by an average 3.6% worldwide led by Asia-Pacific at 7.8%, Americas at 5.0%, and EMEA at 0.4%. Occupancy costs increased in 80 markets, decreased in 24, with no change in 29.   Among the markets exhibiting the most significant gains were the aforementioned Beijing Jianguomen (CBD) along with Beijing’s Finance Street and Guangzhou, China. Beijing’s rise was driven by strong demand, particularly from domestic financial institutions, combined with lack of available space in Finance Street. Rounding out the top five largest annual increases were San Francisco (Downtown) and San Francisco’s Peninsula market.  
While comparisons in dollars are affected by currency exchange rates, annual percent change calculations are based upon occupancy costs in local currency and measurement and not influenced by currency changes. Due to methodology changes in this report, comparisons with figures in previously released reports are not valid. 
Asia Pacific
Asia Pacific had 19 markets ranked in the top 50 most expensive, with three of the top five—Hong Kong-CBD, Tokyo and Beijing’s Jianguomen (CBD)—most expensive markets. According to a CBRE survey of Global Office Occupier Footprints, Hong Kong is the number one location for global office occupiers and this, coupled with scarce land for development, has led to high office rents. The most expensive market in the global ranking from the Pacific Region was Sydney (US$117.88 per sq. ft.), which came in at 15th, on the strength of an 18.9% increase in local currency.  
Despite its most-expensive ranking, Hong Kong experienced the largest annual decrease of all 133 markets tracked (-17.2%) as margin pressures on global financial services firms have impacted its Central submarket in the last year given its high exposure to such firms. Some of these firms have consolidated space requirements leading to increased availability in the core CBD. 

Europe Middle East & Africa (EMEA)
In addition to London’s West End ranking as the world’s second-most expensive market, other markets in the region that top the list are Moscow (occupancy cost of US$171.53 per sq. ft.), Paris (US$123.82 per sq. ft.), and Geneva (US$99.18 per sq. ft.). 
Moscow posted the largest gain for the region as its occupier costs grew by 19.1%, driven by strong tenant demand particularly focused on the CBD area where vacancy is relatively low and new development is very limited. Moscow was followed by Johannesburg, South Africa (14.3%). The largest declines were in Abu Dhabi, United Arab Emirates (-16.7%), and Thessaloniki, Greece (-16.3%). Overall, 12 markets in EMEA experienced declines, while 26 markets saw occupancy costs for the year rise. 
Americas
North America is led by Midtown New York, which posted an office occupancy cost of US$114.30 per sq. ft., on the heels of a 5.9% year-over-year increase. The New York Midtown market was ranked 18th globally. 
San Francisco (Downtown) experienced the largest year-over-year increase, at 34%, with San Francisco (Peninsula) right behind it, at 32.7%, with demand spurred by the technology sector. Overall, 32 markets in the Americas saw occupancy costs for the year rise, while only six experienced declines. 
In Latin America, São Paulo remains the most expensive market, posting an office occupancy cost of US$144.75 per sq. ft., and ranks as the 8th most expensive market globally. Meanwhile, with an occupancy cost of $128.02 per sq. ft., Rio de Janeiro is also in the top 15. 

Top Ten Most Expensive Markets
(In US$ per sq. ft. per annum)
 
Rank
 
         Market
Occ Cost
 
 
 
 
 
 
1
Hong Kong (Central), Hong Kong
248.83
 
2
London - Central (West End), United Kingdom
220.15
 
3
Tokyo, Japan
186.49
 
4
Beijing (Jianguomen - CBD), China
180.76
 
5
Moscow, Russian Federation
171.53
 
6
Beijing (Finance Street), China
166.89
 
7
Hong Kong (West Kowloon), Hong Kong
158.72
 
8
Sao Paulo, Brazil
144.75
 
9
New Delhi (Connaught Place - CBD), India
140.21
 
10
London - Central (City), United Kingdom
131.51
 
Largest Annual Changes Occupancy Costs
(In local currency & measure)

Top 5 Increases
Rank
Market
% Change
 
 
 
 
1
Beijing (Jianguomen - CBD), China
49.4
 
2
Beijing (Finance Street), China
42.0
 
3
Guangzhou, China
40.4
 
4
San Francisco (Downtown), U.S.
34.0
 
5
San Francisco (Peninsula), U.S.
32.7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Top 5 Decreases
Rank
Market
% Change
 
 
 
 
1
Hong Kong (Central), Hong Kong
-17.2
 
2
Abu Dhabi, United Arab Emirates
-16.7
 
3
Thessaloniki, Greece
-16.3
 
4
Dublin, Ireland
-13.6
 
5
Athens, Greece
-13.5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: The full Top 50 Most Expensive Markets chart is located at the end of this press release.
Notes to Editors
  1. The Prime Office Occupancy Costs report is a survey of office occupation costs for prime office space in 133 cities worldwide.
  2. The latest survey provides data on office rents and occupancy costs as of March 31, 2012.
  3. The Largest Annual Changes 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. Due to methodology changes comparisons with figures in previously released reports are not valid.
  6. 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, 2012
Rank
 
Market
OccCost(US$)
1
Hong Kong (Central), Hong Kong
248.83
 
2
London - Central (West End), United Kingdom
220.15
 
3
Tokyo, Japan
186.49
 
4
Beijing (Jianguomen - CBD), China
180.76
 
5
Moscow, Russian Federation
171.53
 
6
Beijing (Finance Street), China
166.89
 
7
Hong Kong (West Kowloon), Hong Kong
158.72
 
8
São Paulo, Brazil
144.75
 
9
New Delhi (Connaught Place - CBD), India
140.21
 
10
London - Central (City), United Kingdom
131.51
 
11
Shanghai (Puxi), China
130.78
 
12
Rio de Janeiro, Brazil
128.02
 
13
Mumbai (Bandra Kurla Complex), India
126.88
 
14
Paris Ile-de-France, France
123.82
 
15
Sydney, Australia
117.88
 
16
Singapore, Singapore
117.39
 
17
Shanghai (Pudong), China
116.35
 
18
New York (Midtown Manhattan ), U.S.
114.30
 
19
Geneva, Switzerland
99.18
 
20
Mumbai (Nariman Point - CBD), India
97.32
 
21
Zurich, Switzerland
96.61
 
22
Caracas, Venezuela
95.68
 
23
Washington DC (Downtown), U.S.
94.51
 
24
Perth, Australia
93.63
 
25
Dubai, United Arab Emirates
92.56
 
26
Seoul (CBD), South Korea
90.70
 
27
Boston (Downtown), U.S.
87.50
 
28
Guangzhou, China
86.55
 
29
Istanbul, Turkey
82.78
 
30
Luxembourg City, Luxembourg
80.65
 
31
Brisbane, Australia
77.85
 
32
Los Angeles (Suburban), U.S.
77.41
 
33
Milan, Italy
76.80
 
34
Stockholm, Sweden
75.44
 
35
Seoul (Yeouido), South Korea
73.49
 
36
Manchester, United Kingdom
71.91
 
37
San Francisco (Downtown), U.S.
71.40
 
38
Toronto (Downtown), Canada
71.16
 
39
Edinburgh, United Kingdom
70.31
 
40
Aberdeen, United Kingdom
70.31
 
41
New York (Downtown Manhattan), U.S.
69.85
 
42
Birmingham, United Kingdom
69.64
 
43
Frankfurt am Main, Germany
68.63
 
44
Taipei, Taiwan
68.11
 
45
Bristol, United Kingdom
65.62
 
46
Calgary (Downtown), Canada
65.36
 
47
Oslo, Norway
65.15
 
48
Glasgow, United Kingdom
64.72
 
49
Vancouver (Downtown), Canada
63.73
 
50
Ho Chi Minh City, Vietnam
63.34
 
Source: CBRE Global Research and Consulting 
About CBRE Group, Inc.
CBRE 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 2011 revenue).  The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE 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. Please visit our Web site at www.cbre.com.

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