CBRE Group Inc. the leading global real estate consulting firm, today, announced the findings of the latest edition of its bi-annual Global Prime Office Occupancy Costs survey. According to the report, New Delhi’s Central Business District (CBD) of Connaught Place is the ninth most expensive prime office market in the world with an occupancy cost of US$153.89 per sq. ft. per annum. Mumbai’s Bandra Kurla Complex (BKC) ranked 20th while the CBD of Nariman Point, ranked 33 on the list of the top 50 most expensive office markets around the world.
Anshuman Magazine, Chairman – India & South-East Asia, CBRE said, “Despite the fact that, Connaught Place has limited supply of prime office space, its location in the heart of India’s capital, coupled with great infrastructure and connectivity to other parts of the city, makes it to be an ideal location for any business to be in. With India’s commercial real estate segment continuing to do well, prime locations across the country including Connaught Place in Delhi and Bandra Kurla Complex and Nariman Point in Mumbai continue to witness demand for prime office space from occupiers.”
The two most expensive markets in the world continue to be Hong Kong (Central) and London’s West End. The top 10 list remains largely consistent, reflecting the ongoing strength of these global gateway cities in attracting and maintaining a successful occupier base.
Hong Kong (Central) became the world’s highest-priced office market with an overall prime occupancy costs of US$302.51 per sq. ft. per annum. Asia continues to dominate the list of the world’s most expensive office locations, accounting for seven of the top ten markets, according to the survey. Hong Kong (West Kowloon) (US$190.02 per sq. ft.) and Beijing (CBD) (US$183.10 per sq. ft.) also featured among the top five most expensive markets. Apart from New Delhi (Connaught Place – CBD), Beijing (Finance Street), Tokyo (Marunouchi/Otemachi) and Shanghai (Pudong) also featured in the top ten list.
Global prime office occupancy costs, which reflect rent, plus local taxes and service charges for the highest-quality, prime office properties, rose 1.9% year-on-year which is lower than the growtin rate in the year ended Q1, 2016 (2.2%) This was largely attributed to the slowdown in the year-on-year growth in Asia Pacific (1.2%) and EMEA (0.8%). On the other hand, occupancy costs in the Americas increased by 3.6% year-on-year.
While occupancy costs continue to see a steady rise, coupled with low vacancy levels and limited supply, the commercial office segment is witnessing a strategic shift. Today’s occupier, in India and around the globe is expecting their preferred office space to feature the latest technologies and amenities available in the market. While actual office spaces are shrinking, these amenities are growing to include virtual networks, video conferencing and cloud storage. Going forward, technology in the workplace will define how much a corporate’s employees need the office to reach their targets. This in turn with the impact the demand for office space and subsequently the associated occupancy costs.
CBRE tracks occupancy costs for prime office space in 121 markets around the globe. Of the top 50 most expensive markets, 18 were in Asia Pacific, 20 in Europe, the Middle East and Africa (EMEA), and 12 in the Americas.