Mumbai beats Manhattan in office costs: Survey

Mumbai ranks five notches above Midtown Manhattan in terms of prime office occupation costs, says a survey by global real estate consulting firm C B Richard Ellis.

This means it is relatively cheaper to hire prime office space in Manhattan in New York than in the snootiest office areas of Mumbai.

The survey ranks Mumbai as the world's 15th most expensive city in terms of prime office occupation costs.

In Mumbai, the survey found, the office occupation costs stood at $56.83 per sq feet a year, more than in Luxembourg City ($56.12/sq feet a year) and less than in Frankfurt ($58.87).

The costliest place in the world to have an office with a posh address: the West End and the City in London, which have grabbed the first two slots.

The survey, which was made public today, found Delhi as the 32nd costliest city in terms of office occupation costs.

While Mumbai has advanced by two notches from its rankings in the last quarter, Delhi has moved up six ranks in the space of a quarter.

The survey found that the upward movement by two prime cities of India was due to the decline in the occupation costs across the globe.

Otherwise, the real estate costs remained firm in India, the study said.

According to Anshuman Magazine, South Asia managing director, CB Richard Ellis, "Given the low per capita income in India, and the high real estate costs, there is a substantial mismatch. A lower ranking would have further encouraged investments into the otherwise booming Indian real estate industry.

"However, the present situation is not a deterrent. The real estate market in India is looking up and is on track to achieve the expected space take-up of 20 m sq ft by the end of 2004."

London's West End is the most expensive office location in the world at $177.39 per sq ft a year, with a much increased margin.

Not only has there been a slight increase in the value of sterling against the dollar, but the West End has experienced a sharp rise in prime office rents over the last six months.

There is now a 48 per cent difference between the total occupation cost in the West End and the second most expensive location, London's 'City' area, at $119.49 per sq feet a year.

According to the survey, $-denominated occupation costs increased in 17 of the top 50 locations. Three of these locations reported an over 10 per cent hike in occupation costs. These include: London's West End, New Delhi and Hong Kong.

The biggest increase of all 158 locations surveyed came in London's West End, where there was a 19 per cent rise in occupation cost over the last six months.

In Rome, Toronto, Paris and Milan the fall was over 10 per cent. As the dollar stabilised over the last six months, gaining slightly against some currencies, this fall can be attributed mainly to falling rental values.

Outside the top 50 the biggest fall was in Caracas, Venezuela, where the occupation cost has fallen by 30 per cent over the last year to $20.62 per sq feet a year due to the weak economy in Venezuela.

Of the top 50 most expensive office locations in the world, 29 experienced a fall in total occupation cost (in dollar terms) over the last six months.