Hong Kong (CBD) the world’s second most expensive office market; Tokyo Inner Central third; Mumbai fourth

London (West End) Remains World’s Most Expensive Office Market in Survey that FindsGlobal Rents Beginning To Stabilize, 1.3% Decline from One Year Ago London’s West End continues to be the world’s most expensive office market, according to CB Richard Ellis (CBRE) Global Research and Consulting’s semi-annual Global Office Rents survey. Hong Kong’s Central Business District (CBD) continued in second place and also recorded the fastest year-over-year occupancy cost rise with a 34.2% increase. Tokyo’s Inner Central remained the third most expensive market for office space. Mumbai held its fourth place position on the list while Moscow remains fifth in the CBRE rankings, which track occupancy costs for prime office space in 175 cities around the globe. “Major markets in emerging economies feature prominently at the top of the list of most expensive office costs as measured in dollars per square foot,” said Nick Axford, Executive Director, Head of Research, Asia at CBRE. ”This pattern developed just a few years ago and it is more pronounced today.” The survey finds that on a year-over-year basis, occupancy costs are beginning to find their cyclical lows worldwide. Ninety-nine of these markets—still a majority—experienced decline, with 19 still registering double-digit percentage-point drops over the past 12 months. However, sixty-one markets saw occupancy costs for the year rise. Occupancy costs in fifteen markets were unchanged during that time period. The year-over-year change in office occupancy costs for the 175 markets monitored revealed a drop of only 1.3% worldwide. Among the markets exhibiting the most significant gains were global gateway markets such as Hong Kong (Central CBD), London City and S?o Paulo. Gateway markets that posted more moderate gains included Paris, Shanghai and Washington, D.C. While comparisons in dollars are affected by currency exchange rates, annual percent change calculations are based upon occupancy costs in local currency and measurement and not influenced by currency changes. GLOBAL TOP 20 INDEX by occupancy cost per square metre Rank City, Country Baht / Month Rank City, Country Baht / Month 1 LondonWest End, United Kingdom 5,210 11 New Delhi, India 2,723 2 Hong Kong (Central CBD) 4,955 12 Dubai, United Arab Emirates 2,564 3 Tokyo, (Inner Central), Japan 4,252 13 Hong Kong(Citywide) 2,489 4 Mumbai, India 3,508 14 Geneva, Switzerland 2,316 5 Moscow, Russian Federation 3,452 15 Zurich, Switzerland 2,265 6 Tokyo(Outer Central), Japan 3,425 16 Luxembourg City, Luxembourg 2,221 7 London City, United Kingdom 3,351 17 Istanbul, Turkey 2,119 8 ParisIle-de-France, France 3,113 18 Milan, Italy 2,115 9 S?o Paulo, Brazil 2,933 19 Stockholm, Sweden 1,971 10 Rio de Janeiro, Brazil 2,808 20 Abu Dhabi, United Arab Emirates 1,940 Source : CBRE Global Office Rents November 2010 USD 1 = THB 30 Asia-Pacific Asia Pacific once again had 13 markets rank in the top 50 most expensive, with three of the top five (Hong Kong Central CBD, Tokyo Inner Central and Mumbai) most expensive markets. Hong Kong (Central CBD), with an occupancy cost of THB 4,955 per sq.m. (up from THB 4,121 per sq.m. six months ago), was first in the region followed by Tokyo’s Inner Central, with an occupancy cost of THB 4,252 per sq.m., Mumbai, with an occupancy cost of THB 3,508 per sq.m., ranked third in the region. Bangkok was ranked at 141th out of 175 cities surveyed, up eight ranks from the previous survey in May 2010, with an occupancy cost of THB 680 per sq.m. No new prime office supply came on stream during the third quarter of 2010. The overall occupancy rate improved slightly from 86% as of Q2 2010 to 86.1% as of Q3 2010 and positive net new take-up of 6,446 sq.m. was recorded in Q3 2010. The period saw an increase in enquires from local and multinational companies looking to establish a presence in Bangkok or expand their existing operations. The trend for multinationals looking to downsize their office space appears to be in decline. This lack of new supply and signs of increasing demand for quality office space should ensure that overall occupancy rates bounce back over the next 18 months. The most expensive market in the global ranking from the Pacific Region was Perth (THB 1,604 per sq.m.), which came in at 35th, despite also experiencing the sixth-largest decline in local currency, at negative 15.8%. Asia Pacific has shown measurable improvement over the past six months, led by substantial year-over-year occupancy-cost increases in Hong Kong (Central CBD), Hong Kong (Citywide) and Beijing, with gains of 34.2%, 23.9% and 11.5%, respectively. More than half of the markets in the region are now posting gains in occupier costs compared to a year ago. Increased economic activity in the Pacific Rim has bolstered demand, and increases in the strength of the Chinese yuan allowed costs to rise relative to other markets. Twelve of these markets experienced declines and 13 markets saw occupancy costs for the year rise. Europe Middle East & Africa (EMEA) EMEA continues to have the most markets on the top 50 list with 30 markets. London’s West End is still the world’s most expensive market with an occupancy cost of THB 5,210 per sq.m., up from THB 4,921 per sq.m. six months ago. Other markets in the region that top the list are Moscow (occupancy cost of THB 3,452 per sq.m.), London (City) (THB 3,351 per sq.m.), Paris (THB 3,113 per sq.m.), and Dubai (THB 2,564 per sq.m.). EMEA showed some signs of stabilization as the Eurozone recovery continued. Less than one-third of all EMEA markets posted occupancy cost gains. London City posted the largest gain for the region as its occupier costs grew by 17.5%, followed by Tel Aviv (13.4%). The largest declines were again among markets impacted by real estate overbuilding and speculation, such as Dubai (-12.5%) and Dublin (-12.4%). Twenty-eight of these markets experienced declines and 16 markets saw occupancy costs for the year rise. Americas North America is led by Midtown New York, which posted an office occupancy cost of THB 1,791 per sq.m. While office occupancy costs in Midtown New York are high for North America, that market ranked just 26th globally. North American markets, for the most part, have not seen occupancy costs begin to recover yet. Less than one-third of North American office markets experienced increases in occupancy costs over the past year. Atlanta (CBD) experienced the largest year-over-year increase, at 7.0%. New York, the largest office market in the U.S., saw occupancy costs decline by 7.6% (Downtown) and 4.5% (Midtown). Fifty-five of these markets experienced declines and 21 markets saw occupancy costs for the year rise. In Latin America, S?o Paulo, which ranked just ahead of Rio de Janeiro, remains the most expensive market, posting an office occupancy cost of THB 2,933 per sq.m. S?o Paulo now ranks as the 9th most expensive market globally. Meanwhile, with an occupancy cost of THB 2,808 per sq.m., Rio de Janeiro has moved into the global top 10 on the strength of its local premium office market combined with the appreciation of the Brazilian real against the U.S. dollar over the past year. Latin America is holding up better than the rest of the world and continues to post gains. Of the region’s 15 markets, only four experienced declines. Brazil saw the largest increases, in S?o Paulo (26.9%) and Rio de Janeiro (13.7%). Brazil’s recovery began in 2Q 2009, so the annual change is reflective of the trough for that country’s office market. Click for photo release at www.thaipr.net

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