Developing economies lead way in global rent growth


Developing countries account for half of the 20 world markets with the fastest growing occupancy costs (in US$ terms) for prime office space, according to CB Richard Ellis Research’s (CBRE) recently released semi-annual Global Market Rents survey.

Thirteen markets posted a 30% or greater increase in occupancy costs over the last year, according to the survey. Occupancy costs represents rent, plus local taxes and service charges. The 13 markets with occupancy costs growing at a rate more than 30% represent a broad cross-section of the global economy. With the emergence of New Delhi, Mumbai and Manila, Asia has more above-30% markets than any other region of the world; the Pacific Region’s Brisbane and Perth both recorded occupancy costs growing at more than 30% per year, with economies heavily influenced by the demand for commodities from Asia; and Buenos Aires and Bogotá are the two Latin American markets with the fastest growing occupancy costs.
North America was responsible for two markets with occupancy costs growing above 30% per year—Downtown Manhattan and Honolulu; while Eastern Europe (Sofia) and the Middle East (Abu Dhabi) have one each. Out of the 176 markets surveyed, occupancy costs increased in 150 and decreased in only 20. Increases in occupancy costs ranged from as high as 92.8% in Abu Dhabi, down to just 0.1% in Las Vegas.

Most expensive global markets
London’s West End has once again topped the Top 50 most expensive office markets in the world, with occupancy costs of $212/square foot/annum, well ahead of the number 2 market, Tokyo Inner Central, at $146/ square foot/annum. The markets of London City, and Tokyo Outer Central took 3rd and 4th place in the rankings, with Hong Kong rising 2 positions from Q3 2005, to sit as the 5th most expensive market. There have been some significant movements in positions year-on-year.
The Indian markets of Mumbai and New Delhi have both seen growth in headline prime rents this year. Mumbai has seen year-on-year rental growth of over 75%, becoming the 7th most expensive market in all of those surveyed. New Delhi also saw growth of 100% in prime headline rents, which saw it move 25 places in the rankings to become the 11th most expensive market with occupancy costs of $82/sq ft/annum. Similarly, Abu Dhabi saw a 100% increase in prime headline rents during the 12 month period to Q3 2006, moving it 52 places up the ranking table and making it the 33rd most expensive market in all of those surveyed.

At $212, London’s West End once again led the top 50 list of the most expensive office markets. Headline rents saw year-on-year growth of 17%, ranking it 16th in terms of the highest growing rental markets over the past 12 months. Another strong growth contender was Moscow, which has seen rents grow by over 28% in the past 12 months, and occupancy costs rise from $87/ square foot/annum in Q3 2005, to $109/ square foot/annum in Q3 2006. This represented the 15th strongest growth of any of the markets surveyed, and keeping Moscow the 6th most expensive city in the world.
Occupancy costs in the City of London rose to $145, an 18% increase from $123 a year ago; maintaining its position as the 3rd most expensive market. Also inside the top 10 were Paris and Dublin, at 8th and 9th respectively. Although both cities have fallen slightly in their rankings in Q3 2006, they have still seen headline rental growth of over 10% year-on-year.  The UK cities of Edinburgh, Manchester, Leeds, Birmingham, Bristol and Glasgow all appeared within the top 20, with occupancy costs ranging from Edinburgh in 12th place to Bristol in 19th place.
Both Madrid and Oslo moved up 5 positions in the rankings to 20th and 45th places respectively. Madrid has seen strong year-on-year growth in headline rents of 19%, making it 24th in terms of the strongest growth of all the global cities. Oslo saw growth of 23%, which made it 29th in terms of the strongest growing cities across the world. The European cities continue to dominate the top most expensive cities, holding 30 of the top 50 positions.

Asia Pacific
Mumbai’s Nariman Point (India) ranked 7th in the top 10 most expensive markets, climbing $41 to $106 (occupancy cost in / square foot /annum used throughout release) over the last 12 months. Elsewhere in Asia, Hong Kong occupancy costs jumped 35% to $116.
Tokyo Inner Central remains one of the world’s most expensive office markets, ranking second overall. Occupancy costs in the Inner Central Five Wards, increased 12% to $146, while Outer Central costs, the 4th highest, increased 14% to $134. Singapore, ranking 37th, rose by $17 to $52. In the Pacific Region, Sydney was the only market to make it into the top 50, coming in at 46th.

Downtown Manhattan (48th) cracked the top 50 list of most expensive office markets, joining Midtown Manhattan (24th), Calgary (31st), Toronto (34th) and Washington, D.C. (44th) among the North American cities. Occupancy in Midtown Manhattan is still the most expensive in the United States, having risen $10 to $62. Rio de Janeiro rose $3 to $51 but slipped several spots to 38th, while Sao Paulo inched up to $43 and dropped to 47th from 44th a year ago. (CBRE)

MET Group Records 2nd Most Profitable Year in 2023 Energy Trade

MET Group Records 2nd Most Profitable Year in 2023

Gov't Considering Fuel Price Intervention Government

Gov't Considering Fuel Price Intervention

Wienerberger Lays Cornerstone of HUF 12 bln Concrete Tile Pl... Manufacturing

Wienerberger Lays Cornerstone of HUF 12 bln Concrete Tile Pl...

Tribe Hotel Budapest Stadium Recognized at LIV Hospitality D... Hotels

Tribe Hotel Budapest Stadium Recognized at LIV Hospitality D...


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.