Dubai and Abu Dhabi expensive office markets

Dubai and Abu Dhabi are ranked ninth and 19 on the list of the most expensive market with occupancy costs at $108.92 and $72.71 per square feet per annum, according to CB Richard Ellis.

London's West End is still the world's most expensive market as occupancy costs stand at $182.94, despite the recent depreciation of the British pound to the US dollar, the global real estate consultancy said in a report on global office rents.

"On a year-over-year basis, global occupancy costs are searching for a bottom. The year-over-year change in office occupancy costs for the 176 markets revealed a collective drop of 4.6 per cent worldwide," CBRE said, adding, "as opposed to a quarter-over-quarter basis, in which it is clear that the markets are steadying".

The larger markets – the Global 25 – experienced a slightly greater decline, of -6.4per cent. The majority of the markets, 116, experienced a decline with 33 of these registering double-digit percentage-point drops in office occupancy costs.

Fifty-three markets experienced annual increases in occupancy costs, but these were generally smaller markets affected by quality shifts in key market assets.

Regional disparity is exhibited in both economic and office-market performance.

Eighteen out of 27 markets in Asia-Pacific experienced declines, with simple averages, showing that the largest declines in the Asia-Pacific (9.2 per cent) led by Singapore (36.2 per cent), Ho Chi Minh City (30.9 per cent), and Perth (27.4 per cent). However, the first part of 2010 has seen improved demand for office space with several Asian markets seeing a rebound in rentals, most notable being Hong Kong's Central CBD.

According to the report, Australia experienced an average decline of nine per cent, with Perth and Brisbane having the largest declines of 27.4 per cent and 20.6 per cent.

Adelaide was the only market in Australia with an increase of 1.5 per cent. Europe, Middle East and Africa (Emea) was the second-weakest region, with an annual decline of 6.2 per cent, led by Moscow (26.5 per cent), Dublin (24.6 per cent) and Abu Dhabi (23.7 per cent). This region as a whole experienced office occupancy cost decreases in 44 out of 57 markets.

North America saw a collective decline of 3.3 per cent, making the region the third-weakest with falling occupancy costs in 51 out of 77 markets. The largest declines were in Calgary CBD (24.9) and New York, Downtown (19 per cent).

Latin America, the report said, is holding up better than the rest of the world and is the only region posting positive gains, with an average 3.4 increase. Out of the 15 markets in the region, only three experienced declines.

The largest increases were in Brazil, in both Rio de Janeiro (17.7 per cent) and Sao Paulo (15.9 per cent).

"With the exception of Latin America, the world's office occupancy costs continue to experience broad-based declines and are still searching for a bottom," CBRE said.

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