London, Moscow World’s Priciest Office Markets; New York Not Close

skyline1 23 London, Moscow Worlds Priciest Office Markets; New York Not CloseCB Richard Ellis in a new report declares London’s West End and Moscow the world’s most expensive office markets, according to occupancy costs for the 12 months ending Sept. 30. Among the 50 office markets ranked by cost in the report, New York doesn’t make an appearance until No. 15: Midtown, with occupancy costs of $98.08 a square foot annually.

Here’s more, including a run-down on the Top 50:

LONDON, MOSCOW REMAIN WORLD’S MOST EXPENSIVE OFFICE MARKETS;

HONG KONG’S CBD BREAKS INTO TOP FIVE

* * *

Abu Dhabi Sets Pace, By Wide Margin, For Fastest Occupancy Cost Growth

Los Angeles — November 25, 2008 — London’s West End and Moscow remain the world’s two most expensive office markets, respectively, while Hong Kong’s CBD, Tokyo’s Inner Central District and Mumbai’s Nariman Point round out the top five, according to CB Richard Ellis Group, Inc. (CBRE) Research’s semi-annual Global MarketView/Office Occupancy Costs survey. The report tracks world markets with the highest as well as fastest-growing occupancy costs for the 12 months ended September 30, 2008.

The average rate of growth for office occupancy costs among the 172 markets monitored in the survey was 8%, almost double last year’s world inflation rate. Up 94.6%, Abu Dhabi, United Arab Emirates (UAE) had by far the fastest growing occupancy costs, with three of the top five fastest growing countries situated in the Middle East. The rise in occupancy costs in the UAE over the past twelve months has reflected market fundamentals—limited supply of quality office space and high demand from international firms, primarily law firms, financial institutions and real estate and construction companies planting a footprint in the UAE.

“Our current perceptions are greatly affected by the current economic malaise and we tend to forget how fast rents and occupancy costs were rising over the last 12 months,” said Dr. Raymond Torto, CBRE’s Global Chief Economist. “Clearly the rate of change is generally slowing, and in some markets the pricing direction is down. The turn in rent trajectory will provide some relief to occupiers and angst to owners. However, unlike previous downturns, which have occurred simultaneously with extensive overbuilding, the real estate market globally today is in a stronger position to weather the difficulties than in the past.”

Asia Pacific was the fastest growing region among markets in the top 50, at an average rate of 26.2%. Among the region’s ten entries into the top 50 fastest growing and second overall, Ho Chi Minh City, Vietnam, was up 51.4%. Multi-national corporation tenants have driven demand for the limited supply of prestige prime office buildings in that city; however Ho Chi Minh City’s rents largely surged in the fourth quarter of 2007 and the first half of 2008. Perth, Australia, was second in the region and fourth overall, up 45.2%, while Hong Kong’s CBD had the third largest increase in the region and 12th overall, up 29.1%.

Occupancy costs in the six Latin American markets that made the top 50 fastest growing rankings grew an average of 21.5%, with two new cities—Santo Domingo, Dominican Republic, and Lima, Peru—making the list. São Paulo, Brazil, led the region and was the seventh fastest growing market overall, up 34%. São Paulo’s occupancy cost increase reflects a shortage of prime office space combined with a relatively strong local economy supported by global demand for commodities and a growing middle class. Meanwhile, of the nine North American markets in the top 50 fastest growing rankings (down from the last report’s15 markets), occupancy cost growth rates averaged 14.5%, the slowest of all the regions covered.

Asia-Pacific

Hong Kong jumped into the top three most expensive cities globally, with occupancy costs rising to $231.59. Ho Chi Minh City dropped from the top spot to number two among the top 50 fastest growing cities, while Perth, Australia, jumped up 10 spots in the most expensive rankings, coming in at number 31.

Europe

London’s West End remained the world’s most expensive office market at $248.66, and Moscow retained its number two spot at $234.73. The City of London was next among the European markets and eighth most expensive overall, at $146.61. In Europe, occupancy costs grew fastest in Moscow and Rome, with increases of 29.8% and 29.5%, respectively.

Americas

Five North American cities are among the world’s Top 50 most expensive office markets: Midtown Manhattan (15th at $98.08); Calgary CBD (38th at $66.58); suburban Los Angeles (41st at $63.58); Toronto CBD (43rd at $61.54); and Downtown New York City (48th at $59.16). In Latin America, São Paulo increased nine spots to 26th, at $75.13.

Top Ten Most Expensive Markets Top Ten Markets with Fastest Growing Occupancy Costs

(In US$ per sq. ft. per annum) (In local currency & measure)

1. London (West End), England 1. Abu Dhabi, UAE

2. Moscow, Russia 2. Ho Chi Minh City, Vietnam

3. Hong Kong (CBD) 3. Dubai, UAE

4. Tokyo (Inner Central), Japan 4. Perth, Australia

5. Mumbai, India 5. Tel Aviv, Israel

6. Dubai, UAE 6. Durban, South Africa

7. Tokyo (Outer Central), Japan 7. São Paulo, Brazil

8. London (City), England 8. Panama City, Panama

9. Singapore 9. Cape Town, South Africa

10. Hong Kong (Prime Districts) 10. Moscow, Russia

  1. Global MarketView/Office Occupancy Costs is a survey of office occupation costs in 172 cities worldwide.
  2. The Fastest Growing ranking is 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.
  3. 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.
  4. 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 November 2008 (converted to U.S. dollars)

Rank

Market

US$/sq ft/annum

€ /sq m/month

£/sq ft/annum

Aus $/sq m/annum

Can$/sq ft/annum

¥ /sq ft/annum

1

London (West End), England

248.66

158.79

139.50

3,393

264.38

26,399

2

Moscow, Russia

234.73

149.89

131.68

3,203

249.56

24,920

3

Hong Kong (Central CBD)

231.59

147.89

129.92

3,160

246.23

24,587

4

Tokyo, (Inner Central), Japan

184.26

117.66

103.37

2,514

195.90

19,562

5

Mumbai (CBD), India

170.85

109.10

95.85

2,331

181.65

18,138

6

Dubai, United Arab Emirates

156.53

99.96

87.82

2,136

166.43

16,619

7

Tokyo (Outer Central), Japan

151.69

96.87

85.10

2,070

161.28

16,105

8

London (City), England

146.61

93.62

82.25

2,001

155.88

15,565

9

Singapore

135.13

86.29

75.81

1,844

143.67

14,346

10

Hong Kong (Prime Districts)

132.97

84.91

74.59

1,814

141.37

14,116

11

Abu Dhabi, United Arab Emirates

132.44

84.57

74.30

1,807

140.81

14,061

12

Paris, France

131.62

84.05

73.84

1,796

139.94

13,974

13

New Delhi (CBD), India

122.18

78.02

68.54

1,667

129.90

12,971

14

Dublin, Ireland

108.58

69.33

60.91

1,482

115.44

11,527

15

New York Midtown, U.S.

98.08

62.63

55.02

1,338

104.28

10,413

16

Ho Chi Minh City, Vietnam

92.83

59.28

52.08

1,267

98.70

9,855

17

Madrid, Spain

88.43

56.47

49.61

1,207

94.02

9,389

18

Zurich, Switzerland

88.01

56.20

49.37

1,201

93.57

9,343

19

Milan, Italy

85.76

54.76

48.11

1,170

91.18

9,104

20

Birmingham, England

84.67

54.07

47.50

1,155

90.02

8,989

21

Oslo, Norway

83.63

53.40

46.92

1,141

88.92

8,879

22

Luxembourg City, Luxembourg

82.25

52.52

46.14

1,122

87.45

8,732

23

Edinburgh, Scotland

82.00

52.36

46.00

1,119

87.18

8,705

24

Manchester, England

79.32

50.65

44.50

1,082

84.34

8,421

25

Geneva, Switzerland

78.07

49.86

43.80

1,065

83.01

8,289

26

São Paulo, Brazil

75.13

47.98

42.15

1,025

79.88

7,976

27

Shanghai (Pudong), China

75.01

47.90

42.08

1,024

79.75

7,963

28

Frankfurt am Main, Germany

74.09

47.31

41.56

1,011

78.77

7,866

29

Glasgow, Scotland

73.98

47.24

41.50

1,009

78.65

7,854

30

Stockholm, Sweden

73.72

47.08

41.36

1,006

78.38

7,827

31

Perth, Australia

73.72

47.07

41.36

1,006

78.38

7,826

32

Aberdeen, Scotland

73.08

46.67

41.00

997

77.70

7,759

33

Warsaw, Poland

71.34

45.56

40.02

973

75.85

7,574

34

Leeds, England

71.30

45.53

40.00

973

75.81

7,570

35

Bristol, England

70.41

44.96

39.50

961

74.86

7,475

36

Rome, Italy

68.84

43.96

38.62

939

73.19

7,308

37

Rio de Janeiro, Brazil

68.77

43.92

38.58

938

73.12

7,301

38

Calgary (CBD), Canada

66.58

42.52

37.35

909

70.79

7,069

39

Shanghai (Puxi), China

65.97

42.12

37.01

900

70.14

7,003

40

Tel Aviv, Israel

65.50

41.82

36.74

894

69.64

6,953

41

Los Angeles (sub), U.S.

63.58

40.60

35.67

868

67.60

6,750

42

Athens, Greece

63.04

40.26

35.37

860

67.03

6,693

43

Toronto (CBD), Canada

61.54

39.30

34.52

840

65.43

6,533

44

Seoul (CBD), South Korea

60.24

38.47

33.80

822

64.05

6,396

45

Munich, Germany

60.23

38.46

33.79

822

64.04

6,394

46

Sydney (Core), Australia

59.39

37.92

33.32

810

63.14

6,305

47

Jersey, England

59.29

37.86

33.26

809

63.03

6,294

48

New York Downtown, U.S.

59.16

37.78

33.19

807

62.90

6,281

49

Liverpool, England

57.93

36.99

32.50

791

61.59

6,150

50

Brussels, Belgium

57.42

36.67

32.21

784

61.05

6,096

Top 50 Most Markets with Fastest-Growing Occupancy as of November 2008 (ranked by 12-month % change increases in local currency and measure)

Rank

Market

% Change

1

Abu Dhabi, United Arab Emirates

94.6

2

Ho Chi Minh City, Vietnam

51.4

3

Dubai, United Arab Emirates

50.9

4

Perth, Australia

45.2

5

Tel Aviv, Israel

40.7

6

Durban, South Africa

36.8

7

São Paulo, Brazil

34.0

8

Panama City, Panama

30.9

9

Cape Town (Claremont), South Africa

30.0

10

Moscow, Russia

29.8

11

Rome, Italy

29.5

12

Hong Kong (Central CBD)

29.1

13

Singapore

27.8

14

Johannesburg (Sandton), South Africa

27.3

15

Santo Domingo, Dominican Republic

27.3

16

Christchurch, New Zealand

26.6

17

Boston (CBD), U.S.

25.5

18

Hong Kong (Prime Districts)

25.0

19

Luxembourg City, Luxembourg

23.8

20

Helsinki, Finland

20.0

21

Aberdeen, Scotland

19.7

22

Lima, Peru

19.4

23

Milan, Italy

19.3

24

Geneva, Switzerland

17.8

25

Buenos Aires, Argentina

17.7

26

Los Angeles (CBD), U.S.

17.4

27

Oslo, Norway

17.1

28

Gothenburg, Sweden

17.0

29

Vancouver (CBD), Canada

17.0

30

Shanghai (Puxi), China

16.2

31

Ventura, U.S.

15.7

32

Palma De Mallorca, Spain

15.4

33

Malaga, Spain

14.9

34

Adelaide, Australia

14.9

35

Lyon, France

14.5

36

New Delhi (CBD), India

13.6

37

Lille, France

13.0

38

Prague, Czech Republic

13.0

39

Zurich, Switzerland

13.0

40

Valencia, Spain

12.5

41

Sydney (Core), Australia

12.2

42

Charlotte, U.S.

11.6

43

Frankfurt am Main, Germany

11.4

44

Stamford, U.S.

11.2

45

Rio de Janeiro, Brazil

11.2

46

Montreal (CBD), Canada

11.1

47

Marseille, France

10.9

48

New York Downtown, U.S.

10.6

49

Calgary (CBD), Canada

10.6

50

Quito, Ecuador

10.0