London (West End) remains world’s most expensive office market

HONG KONG: London’s West End continues to be 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) remained in second place as it recorded the fastest year-over-year occupancy cost rise with a 34.2% increase.

Tokyo’s Inner Central remained the third most expensive market for office space while Mumbai held its fourth place position on the list followed by Moscow in fifth. The rankings track occupancy costs for prime office space in 175 cities around the globe.

“Major markets in emerging economies feature prominently at the top of the list of most expensive office costs as measured in dollars per square foot,” said Nick Axford, Executive Director, Head of Research, Asia at CBRE in a statement on Nov 11. ”This pattern developed just a few years ago and it is more pronounced today.”

On a year-over-year basis, occupancy costs are beginning to find their cyclical lows worldwide. Ninety-nine of these markets—still a majority—experienced decline, with 19 registering double-digit percentage-point drops over the past 12 months. However, 61 markets saw occupancy costs for the year rise. Occupancy costs in fifteen markets were unchanged during that period. The year-over-year change in office occupancy costs for the 175 markets monitored revealed a drop of only 1.3% worldwide.

Among the markets exhibiting the most significant gains were global gateways such as Hong Kong (Central CBD), London City and São Paulo, Brazil. 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.


Asia Pacific once again had 13 markets ranked in the top 50 most expensive, with three of the top five (Hong Kong Central CBD, Tokyo Inner Central and Mumbai) among the most expensive. Hong Kong (Central CBD), with an occupancy cost of US$184.21 (RM573.45) psf (up from US$153.20 psf six months ago was first in the region followed by Tokyo’s Inner Central, with an occupancy cost of US$158.08 psf and Mumbai, with an occupancy cost of US$130.41 psf.

The most expensive market in the Pacific Region was Perth (US$59.63 pst), which came in at 35th, despite experiencing the sixth-largest decline in local currency, at negative 15.8%.

Asia Pacific has shown measurable improvement over the past six months, led by substantial year-over-year occupancy-cost increases in Hong Kong (Central CBD), Hong Kong (Citywide) and Beijing, with gains of 34.2%, 23.9% and 11.5%, respectively.

More than half of the markets in the region are now posting gains in occupier costs compared to a year ago. Increased economic activity in the Pacific Rim has bolstered demand, and increases in the strength of the Chinese yuan allowed costs to rise relative to other markets. Twelve of these markets experienced declines and 13 markets saw occupancy costs for the year rise.

Europe Middle East & Africa (EMEA)

EMEA continues to have the most markets on the top 50 list with 30 markets. London’s West End leads with an occupancy cost of US$193.69 psf, up from US$182.94 psf six months ago. Other markets in the region that top the list are Moscow (occupancy cost of US$128.33 psf), London (City) (US$124.59 psf), Paris (US$115.72 psf), and Dubai (US$95.32 psf).

EMEA showed signs of stabilising as the eurozone recovery continued. Less than one-third of all EMEA markets posted occupancy cost gains.

London City posted the largest gain for the region as its occupier costs grew by 17.5%, followed by Tel Aviv (13.4%).

The largest declines were again among markets impacted by real estate overbuilding and speculation, such as Dubai (-12.5%) and Dublin (-12.4%). Twenty-eight of these markets experienced declines and 16 markets saw occupancy costs for the year rise.


North America is led by Midtown New York, which posted an office occupancy cost of US$66.59 psf. While office occupancy costs in Midtown New York are high for North America, that market ranked just 26th globally.

North American markets, for the most part, have not seen occupancy costs begin to recover yet. Less than one-third of North American office markets experienced increases in occupancy costs over the past year. Atlanta (CBD) experienced the largest year-over-year increase, at 7.0%. New York, the largest office market in the U.S., saw occupancy costs decline by 7.6% (Downtown) and 4.5% (Midtown). Fifty-five of these markets experienced declines and 21 markets saw occupancy costs for the year rise.

In Latin America, São Paulo, which ranked just ahead of Rio de Janeiro, remains the most expensive market, posting an office occupancy cost of US$109.03 psf.  São Paulo is the 9th-most expensive market globally. Meanwhile, with an occupancy cost of US$104.40 psf, Rio de Janeiro has moved into the global top 10 on the strength of its local premium office market combined with the appreciation of the Brazilian real against the US dollar over the past year.

Latin America is holding up better than the rest of the world and continues to post gains. Of the region’s 15 markets, only four experienced declines. Brazil saw the largest increases, in São Paulo (26.9%) and Rio de Janeiro (13.7%). Brazil’s recovery began in 2Q 2009, so the annual change is reflective of the trough for that country’s office market.

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