Global Office Rents Survey lists London’s West End at the top.
The rupee’s rise against the dollar and pick-up in office leasing transactions in its central business district, Nariman Point, have propelled the country’s commercial capital, Mumbai, to fourth-most expensive office rent market in the world, a new study shows.
When the last such study was conducted, in December 2009, Mumbai was the seventh most expensive market.
| RENT RANTS | ||
| Rank | Market | Rent * |
| 1 | London West End, UK | 182.94 |
| 2 | Hong Kong (Central CBD) | 153.20 |
| 3 | Tokyo, (Inner Central), Japan | 143.99 |
| 4 | Mumbai, India | 125.76 |
| 5 | Moscow, Russian Federation | 125.10 |
| 6 | Tokyo (Outer Central), Japan | 118.41 |
| 7 | Paris Ile-de-France, France | 113.23 |
| 8 | London City, UK | 110.07 |
| 9 | Dubai, UAE | 108.92 |
| 10 | São Paulo, Brazil | 100.00 |
| *$ per sq ft per annum | ||
According to the study released today, office occupancy costs measured in dollars are affected by changes in the dollar’s value versus the local currency. Hence, office occupancy costs when converted into dollars are driven by both the local market dynamics of supply and demand, as well as currency changes.
“We have found that currency fluctuations play a big role with regard to where markets rank in the top 10 for office costs,” said Raymond Torto, global chief economist, CBRE.
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While Mumbai has an average rent of $125.76 (Rs 5,785) per sq ft per annum, London’s West End, highest on the list, has $182.94 (Rs 8,415) per sq ft per annum, according to the ‘Global Office Rents Survey’ by international property consultant CB Richard Ellis.
“Though activity has picked up in Mumbai CBD in the last four-five months, the primary reason for this jump is the rupee strengthening,’’ says Anshuman Magazine, chairman and managing director of CB Richard Ellis, South Asia.
The office property market was hit hard during the slowdown in 2009, as demand slowed from corporates and financial institutions and rents dwindled by up to 50 per cent.
In the current study, Delhi dropped to 11th place from 10th earlier, as Brazil’s Sao Paulo pipped the Indian capital to reach the top 10.
However, despite the jump in positions, rents may not move faster. “There is a lot of supply outside CBDs of Mumbai and Delhi and, therefore, rents will remain flat or stable in the medium term,” Magazine adds.
On a year-over-year basis, the study found global occupancy costs were reaching a trough, with markets seeing a collective drop of 4.6 per cent, world over. A majority of the markets, 133 of them, had shown a decline, while 33 posted double-digit decline in occupancy costs. Only 53 showed increase in costs. The study was conducted on 176 cities.
“While economic data reflects improvements year-over-year, the commercial real estate market lags the economy and our occupancy cost survey still shows falling costs,” added Torto.
Latin America, led by Brazil, was the only region to show an increase in occupancy casts, the study says.