Business | Property
Abu Dhabi's fast-growing office rents to slow
London's West End remains the world's most expensive office rental market, but businesses in Abu Dhabi are shelling out the world's fastest-growing rents, research from CB Richard Ellis showed.
- Reuters
- Published: 23:35 December 4, 2008
London: London's West End remains the world's most expensive office rental market, but businesses in Abu Dhabi are shelling out the world's fastest-growing rents, research from CB Richard Ellis showed.
However, with property markets under strain around the globe, CB Richard Ellis said falling rents and slowing rental growth rates could jeopardise the league-topping positions of both London and Abu Dhabi in the next 12 months.
Its Global MarketView Office Occupancy Costs Survey found tenants in London's West End paid an average $248.66 (Dh912) per square foot for office space in the year to September 30, while Abu Dhabi office rental costs surged 94.6 per cent to $132.44.
"There's downward pressure on many of the markets covered by the survey and certainly London, in particular, is susceptible to that," Richard Holberton, director of EMEA Research at CB Richard Ellis, told Reuters in a telephone interview.
"Whether this changes the relative positions of each market, it's very difficult to say," he said.
Separately, in the report, Holberton said: "European markets as a group are expected to experience reduced occupier costs over the course of next year as landlords seek to secure tenants in a tougher business environment."
Meanwhile, rents in London's West End were on average $14 more expensive per square foot than in Moscow, the world's second most expensive office rental market.
Growth in Abu Dhabi was almost double that of the world's second fastest growing office rental market of Ho Chi Minh City in Vietnam.
The average rate of growth for office occupancy costs in the 172 markets monitored in the survey was eight per cent, almost double last year's world inflation rate, the survey said.
Dubai's role
Illustrating the appeal of the Middle East to multinational corporates, Dubai was ranked the world's third fastest-growing office rental markets with rents of $156.53 per square foot and $65.50 per square foot respectively.
"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 Raymond Torto, CB Richard Ellis' global chief econ-omist.
Asia Pacific was the fastest growing region among markets in the top 50, with office rents rising at an average rate of 26.2 per cent. Office rents in Ho Chi Minh City rose by 51.4 per cent to $92.83 per square foot.
Occupancy costs in the six Latin American markets that made the top 50 fastest growing rankings grew at an average of 21.5 per cent, with two new cities - Santo Domingo in the Dominican Republic, and Lima, Peru making the list.
Brazil's Sao Paulo was Latin America's fastest-growing market and the world's seventh fastest growing market overall, up 34 per cent to $75.13 per square foot, per year.
Of the nine North American markets in the top 50 fastest growing rankings, occupancy cost growth rates averaged 14.5 per cent, the slowest of all the regions covered.
Five North American cities were named in the world's Top 50 most expensive office markets. Midtown Manhattan was the most costly of these, ranked 15th in the world with average office rents of $98.08 per square foot, per year.
In Europe, occupancy costs grew fastest in Moscow and Rome, with increases of 29.8 per cent and 29.5 per cent.
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