Dubai out of most expensive cities for office space

Dubai has fallen out of the world’s top ten most expensive cities in terms of office rents as the rents dropped below $100 per square foot due to growing oversupply of offices in the emirate.

According to latest statistics released by CB Richard Ellis (CBRE) in its bi-annual survey, Dubai office rents dropped 12.5 per cent to $95.32 per square foot at the end of September 30, 2010 against $108.9 for the same period last year.

The emirate was ranked 12th most expensive city in terms of office rents compared to eighth last year, said CBRE.

Office rents in Abu Dhabi saw 14.56 per cent drop by September 30, 2010 to $72.11 per square foot against $84.4 in September 30, 2009.

It also pushed the UAE capital’s ranking to 20th most expensive city for office rents against 14th last year.

None other Gulf city ranked in the world’s top 50 most expensive cities.

London's West End continued to remain as the world's most expensive office market, rising to $193.7 sqft per annum at the end of September 30, 2010 against $184.85 for the same period last year. Hong Kong saw the biggest increase in office rents of 27 per cent, dethroning Tokyo from second place. Other top ten most expensive cities for office rents include Tokyo (Inner Central), Mumbai, Moscow, Tokyo (Outer Central), London City, Paris Ile-de-France, Sao Paulo and Rio de Janeiro.

Dr. Raymond Torto, CBRE's Global Chief Economist, said: “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. This pattern developed just a few years ago and it is more pronounced today."

Twenty-eight markets in Europe, Middle East and Africa (Emea) experienced declines and 16 markets saw occupancy costs for the year rise.

The survey of 175 markets 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 per cent worldwide.

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