Office rents rose an average 12% around the world last year, driven by worldwide economic expansion, with Mumbai increasing enough to make it the world's fifth most expensive city, a Cushman & Wakefield study found.
That compares with a 4.3% increase in 2005, according to the „Office Space Across the World” study released today by Cushman & Wakefield, the world's second-largest real estate brokerage. Africa and the Middle East had the biggest increases, with rents rising 32% in the region. Rents rose in 74% of the 211 markets in 51 countries surveyed and declined in only 6%, the New York-based real estate brokerage said. Office rents have been boosted by economic growth around the world, with the driving force in most markets being the success of the financial services industry, Cushman said. A stock market recovery, record levels of mergers and acquisitions, and a rise in the sophistication of financial markets globally have spurred expansion, the company said. „The global economic expansion became much more synchronized in 2006,” Ken McCarthy, managing director for research services at Cushman, said in an interview. „Over the past several years, we've seen growth in areas like China, India and the US, but not as much in areas like Europe. Now it's pretty much across the board.”
The world's most expensive office markets last year were London's West End, with average annual occupancy costs of $246.17 per square foot (€2,009 per square meter); Tokyo's central business district, at $182.88 per square foot; Hong Kong, at $177.78; and Paris, at $123.98. London and Paris maintained their year-earlier rankings, while Tokyo and Hong Kong switched positions. The average rent in Mumbai's Worli market more than doubled to $120.15 per square foot, moving its worldwide ranking up six places from No. 11 a year earlier and making it a more expensive place to rent office space than such cities as Milan, New York and Dubai. Goldman Sachs Group Inc., UBS AG and Credit Suisse First Boston all expanded in Mumbai last year, Cushman said. „It's the combination of the information technology industry and the financial services sector,” McCarthy said. „Those are the two that have significantly increased their demand in India for the outsourcing industry.” While rents in New York's Midtown Manhattan market rose 28% to $81.93 a square foot, its position worldwide dropped to No. 7 from No. 5, having been pushing down by Mumbai and Dublin, whose ranking moved up to No. 6 from No. 12 after rents increased 43% from a year earlier in the central districts of Dublin 2 and Dublin 4. (Bloomberg)