Asia-Pacific recorded highest rental-rate growth globally

According to Cushman & Wakefield, Asia-Pacific – most notably Beijing – is experiencing a boom in office rents fuelled by rising demand and increasingly limited supply. As the Chinese calendar moves into the Year of the Dragon, prime office rents in Beijing have risen year-on-year by 75%, a steeper increase than 2010 (48%) and the highest increase of any city in the world during 2011.

Beijing is now more expensive than Shanghai and is the third most costly city in Asia for occupiers taking office space behind Hong Kong and Tokyo. The two fastest-rising locations in terms of rental growth in Asia Pacific after Beijing were Shanghai (27%) and Singapore (24%).

On a global basis, Hong Kong remains the most expensive city for office space in terms of total occupancy costs, followed by London (West End) in second place, and Tokyo in third. The top three locations remained unchanged from last year. In 2010, Tokyo held the top position with London second, and Hong Kong third.

Most expensive office locations 2012
Rank 2011	Rank 2012	Location	Occupancy cost (€/m²/year)	Rental growth/ decline in %
1	1	Hong Kong	2.026	+1
2	2	London (West End)	1.978	+8
3	3	Tokyo	1.635	+7
7	4	Moscow	1.223	+41
n/a	5	Beijing	1.082	+75
5	6	New York	992	+4
6	7	Sydney	987	+6
4	8	Rio de Janeiro	904	-8
9	9	Paris	875	+5
10	10	Zurich	809	-3

Source: Cushman & Wakefield

On a regional basis, Asia-Pacific saw an 8% rise in rents in 2011, the highest rate of growth in the world. The most expensive location in the Americas region was New York (Midtown), which moved ahead of Rio de Janeiro to claim the number one position in the Americas, despite dropping in the global ranking to sixth in this year from fifth last year.

“From a broad global perspective, rental rate growth has been driven primarily by modest economic improvements in an environment of limited new supply,” said Glenn Rufrano, President and Chief Executive Officer of Cushman & Wakefield.

Globally, 2011 saw office demand improving, availability falling and rents rising by 3% - an increase on 2010 (1%). The uplift in rents is a reflection of the declining balance of Grade A availability in a growing number of countries. Last year was the second consecutive year of positive rental growth following a year of declining rents in all regions in 2009.

However, the recovery remains restricted to prime office space, and is most visible in major gateway cities. While the year began strongly, economic uncertainty on a global level resulted in a drop in leasing activity during the third quarter and a slow recovery is expected through 2012.



Americas
The markets with the highest office rental growth in the Americas in 2011 were Sao Paulo and Brasilia with increases of 24% and 21% respectively. Rents in the most expensive location, New York (Midtown), rose by 4%. Rio de Janeiro’s exceptional rental uplift in 2010 (almost 50%) was not repeated last year, with the city experiencing a drop in prime office rents of 8%. As a result, Rio de Janeiro fell back behind New York as the region’s most expensive office market in 2011.