HONG KONG, Feb. 6, 2012 /PRNewswire-Asia/ -- Cushman & Wakefield, the world's largest privately owned real estate services firm, today announced the most expensive office locations in 2012. Cushman & Wakefield global research shows Beijing office market with the world's fastest rental-rate growth year-over-year, with prime office rents in Beijing up over 70% last year. Hong Kong remains the world's most expensive office market for the second year running. While global office market saw positive rental growth of 3% in 2011, up from 1% in 2010, Asia-Pacific recorded highest rental-rate growth globally.
The world's most expensive office locations 2012
| Rank 2012 | Rank 2011 | Location | Occupancy Cost per sq ft /year | Rental growth/ decline (%) |
| 1 | 1 | Hong Kong | US$244 (approx. HK$1,892) |
+1 |
| 2 | 2 | London (West End) | US$239 (approx. HK$1,854) |
+8 |
| 3 | 3 | Tokyo | US$197 (approx. HK$1,528) |
+7 |
| 4 | 7 | Moscow | US$148 (approx. HK$1,148) |
+41 |
| 5 | 15 | Beijing | US$130 (approx. HK$1,008) |
+75 |
| 6 | 5 | New York (Midtown) | US$120 (approx. HK$931) |
+4 |
| 7 | 14 | Sydney | US$119 (approx. HK$923) |
+6 |
| 8 | 4 | Rio de Janeiro | US$109 (approx. HK$845) |
-8 |
| 9 | 8 | Paris | US$106 (approx. HK$822) |
+5 |
| 10 | 9 | Zurich | US$98 (approx. HK$760) |
-3 |
Source: Cushman & Wakefield 2011
Technical notes: For comparison purposes, since rents are often quoted on a different measurement basis in different markets, occupancy costs in the chart above are inclusive of office rents that have been standardized by adjusting the rent to a net internal area basis. In addition, total occupancy costs take into account service charges and local taxes to allow direct comparisons between countries.
According to Cushman & Wakefield, Asia-Pacific, most notably Beijing, is experiencing a boom in office rents fuelled by rising demand and increasingly limited supply. As the world enters the Year of the Dragon, prime office rents in Beijing have risen year-on-year by 75%, a steeper increase than 2010 (48%) and the highest increase of any city in the world during 2011.
Beijing is now more expensive than Shanghai and is the third most costly city in Asia for occupiers taking office space behind Hong Kong and Tokyo. The two fastest-rising locations in terms of rental growth in Asia Pacific after Beijing were Shanghai (27%) and Singapore (24%).
On a global basis, Hong Kong remains the most expensive city for office space, in terms of total occupancy costs, followed by London (West End) in second place, and Tokyo in third. The top three locations remained unchanged from last year. In 2010, Tokyo held the top position, with London second and Hong Kong third.
On a regional basis, Asia-Pacific saw an 8% rise in rents in 2011, the highest rate of growth in the world. The most expensive location in the Americas region was New York (Midtown), which moved ahead of Rio de Janeiro to claim the number one position in the Americas, despite dropping in the global ranking to sixth in this year from fifth last year.
"From a broad global perspective, rental rate growth has been driven primarily by modest economic improvements in an environment of limited new supply," said Glenn Rufrano, President and Chief Executive Officer of Cushman & Wakefield.
Globally, 2011 saw office demand improving, availability falling and rents rising by 3% -- an increase on 2010 (1%). The uplift in rents is a reflection of the declining balance of Grade A availability in a growing number of countries. Last year was the second consecutive year of positive rental growth following a year of declining rents in all regions in 2009.
However, the recovery remains restricted to prime office space, and is most visible in major gateway cities. While the year began strongly, economic uncertainty on a global level resulted in a drop in leasing activity during the third quarter and a slow recovery is expected through 2012.
John Siu, Executive Director Hong Kong, Cushman & Wakefield, commented, "The Hong Kong office market, especially the activity in Greater Central (CBD) was very much affected by the credit crisis in Europe in the second half of 2011. Banking and finance occupiers in particular have become very cautious about their office expansion and relocation plans. As a result, landlords are now more willing to offer additional rental incentives to retain tenants in their buildings and attract new tenants. Rents in Greater Central are expected to adjust downward by 10 to 15% over the next 12 months."
Andy Zhang, Managing Director of Cushman & Wakefield China, commented on China's office market, "We noticed an upward trend in office rents in most major Chinese cities in 2011. The unprecedented urbanization process in China and strong economic growth will continue to drive up the demand for office space. Beijing and Shanghai have relatively mature and international office markets and will lead the rental growth. With a single-digit record low vacancy rate and not much quality supply foreseeable in the coming years, we expect Beijing and Shanghai to maintain the landlords' market position in 2012, but the rental growth will slow down. Tenants have to be prepared with a strategy to live through this high-rental, low-vacancy period."
About Cushman & Wakefield
Cushman & Wakefield is the world's largest privately-held commercial real estate services firm. Founded in 1917, it has 235 offices in 60 countries and more than 13,000 employees. The firm represents a diverse customer base ranging from small businesses to Fortune 500 companies. It offers a complete range of services within five primary disciplines: Transaction Services, including tenant and landlord representation in office, industrial and retail real estate; Capital Markets, including property sales, investment management, investment banking, debt and equity financing; Client Solutions, including integrated real estate strategies for large corporations and property owners, Consulting Services, including business and real estate consulting; and Valuation & Advisory, including appraisals, highest and best use analysis, dispute resolution and litigation support, along with specialized expertise in various industry sectors. A recognized leader in global real estate research, the firm publishes a broad array of proprietary reports available on its online Knowledge Center at www.cushmanwakefield.com
