LONDON (Reuters) - London’s West End, the home of Britain’s hedge fund industry, overtook Hong Kong’s Central district as the world’s costliest office location in 2012 as budget-conscious firms scaled back in the Asian financial centre, data showed.
The annual occupancy cost per desk in the West End was stable last year at $23,500 (14,888.49 pounds) but fell 12 percent to $22,190 in Hong Kong Central, property consultancy DTZ said in a report.
The report, which measured costs in 126 business districts in 49 countries, included items like rent, maintenance and property taxes.
Geneva was the third most expensive locale while Surabaya, Indonesia’s second-largest city, was the cheapest at $1,610 per annum, the report said.
Companies have been pulling out of Hong Kong’s traditional core business areas to cut costs amid lingering uncertainties over the health of the global economy, leaving a rising amount of vacant space that is pushing down rents.
In 2011, occupancy costs in Hong Kong Central were 11 percent higher than London’s West End at $25,160, DTZ said.
A lack of supply is pushing up rents in the West End, aggravated by a growing trend to convert offices to homes as developers cash in on the insatiable demand from overseas buyers of luxury London property as a safe place to park cash.
The West End is home to many of Europe’s hedge funds, which have shunned the glass blocks of the traditional financial districts further east, preferring former Georgian houses and high-end restaurants and shops in neighbourhoods like Mayfair and St James‘s.
Average global office occupancy costs grew by 1 percent over 2012 and DTZ said it expects them to increase by 2.3 percent over the next two years, boosted by demand from firms for offices in emerging, Asian markets like Beijing and Jakarta.
Reporting by Brenda Goh, additional reporting by Tom Bill; Editing by David Cowell