KUALA LUMPUR: The most expensive office market in the world is currently London’s West End, followed by Hong Kong’s Central Business District (CBD) and Tokyo’s Inner Central, according to CB Richard Ellis Group, Inc (CBRE) Global Research and Consulting’s semi-annual Global Office Rents survey.
In a statement released by the company on May 5, it was found that on a year-on-year (y-o-y) 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 decline of –6.4%.
“We have found that currency fluctuations play a big role with regard to where markets rank in the top 10 for office costs. However, the ‘most expensive club’ still includes the usual names — London, Hong Kong and Tokyo,” Dr Raymond Torto, CBRE’s Global Chief Economist said.
Office occupancy costs, when converted into US dollars, are driven by both the local market dynamics of supply and demand, as well as currency changes.
Asia Pacific has 13 markets in the top 50 most expensive list, and three of the top five most expensive markets. Hong Kong CBD has an occupancy cost of US$153.20 (RM492) psf, while Tokyo’s Inner Central followed close at US$143.99 psf and Mumbai, with an occupancy cost of US$125.76 psf. Mumbai moved up into the top five global markets mainly due to the recent appreciation of the rupee to the US dollar.
According to the statement, Asia Pacific also 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-on-year.
The first part of 2010, however, has seen improved demand for office space, with several Asian markets seeing a rebound in rentals, with Hong Kong’s Central CBD being the most notable.
Brazil, leading the Latin American Market, was the only region to show a y-o-y increase in occupancy costs.