NEW YORK London elbowed its way past Hong Kong to regain the title as the world's most expensive market in which to rent office space, while Rio de Janeiro jumped to the No. 3 spot from No. 8, according to a report by global real estate services firm Cushman & Wakefield.
It was the first time since 2008 that London took the top spot. Competition for the scarce high quality office space in London fuelled office rents by 2 percent in the city's West End bolstering rents sufficiently to leapfrog over Hong Kong, according to the report on Tuesday. Office rents in the West End are expected to continue to grow as the economy improves, Cushman & Wakefield said.
At 2,137 euros per square meter, or $262 (169.8 pounds) per square foot, London's occupancy cost, which includes taxes and charges for cleaning and other services, are more than twice those of Paris, New York and Moscow.
Hong Kong's central business district dropped to second place. But the Zona Sul area of Rio de Janeiro barreled its way into the top three of the world's most expensive office locations, with rents up 43 percent over last year, the report said.
Globally, prime offices building rent rose by 3 percent, the report said. South America, particularly Brazil and Colombia, accounted for much of that growth, while many markets suffered under continuing economic uncertainty.
"Safe havens or gateway cities such as London, Hong Kong and New York continue to command high rents despite uncertain economic conditions, as they remain key markets in which to do business; while burgeoning population growth has led to rising occupancy costs in emerging markets in South America and Asia," Glenn Rufrano, Cushman & Wakefield president and chief executive said in a statement.
Rounding out the top 10 most expensive office markets at the start of 2013 compared with 2012 were:
* No. 4 Connaught Place, New Delhi; up from No 5
* No. 5 Tokyo central business district, 5 Central Wards; down from No. 3
* No. 6 Moscow central business district; down from No. 4
* No. 7 Beijing central business district; down from No. 6
* No. 8 New York, Midtown, Madison and Fifth avenues; down from No. 7
* No. 9 Sydney central business district; unchanged
* No. 10 Paris central business district; unchanged
(Reporting By Ilaina Jonas; editing by Sofina Mirza-Reid)