HK, Tokyo overtake London as most expensive office locations

London has lost its status as the world’s most expensive office location for the first time in nine years.According to the new Office Space Across the World 2009 report from global real estate advisor Cushman and Wakefield, Hong Kong and Tokyo are now the world’s two most expensive locations relegating London to thirdplace. The cost of occupying a prime square metre of office per year in Hong Kong now stands at €1,743.

Although rents in Hong Kong actually fell 4 per cent in 2008, the much larger 23 per cent fall in London’s West End pushed occupancy costs down further to €1,403 per sq m per annum. The cost of space in Tokyo now stands at €1,649 per sq m per annum, a fall of 19 per cent in 2008.

Office Space Across the World 2009 compares office occupancy costs in 202 key locations in 57 countries around the world. Of these 202 locations, 58 per cent showed rental growth in 2008, 26 per cent saw stable rents and 16 per cent showed a rental fall (compared with only 1 per cent in 2007). Office rents globally rose on average by 3 per cent, significantly below the 14 per cent achieved in 2007 and the lowest growth rate since 2004.

South America was the best performing region with rental growth averaging 12 per cent for the year. Western Europe was the poorest performing region with average rental growth of only 1 per cent. The impact of the global economic downturn has been felt in all markets although some were better placed to withstand declining occupier demand for space. The expansion of financial institutions, particularly the hedge funds, have driven up rents in London’s most prestigious West End market for the last few years but it has now felt the full impact of the credit and banking cri