Mumbai, New Delhi rank among ten most expensive office markets in the world: Report

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While, at $299.54 per square feet (sq. ft.) per annum, London's West End easily retained the top spot, other central business districts (CBDs) have been gaining ground, the report has revealed.

The occupancy cost or rent in Mumbai's CBD (rank 4) was $210.97 per sq. ft per annum while that in New Delhi was $145.16 per sq ft per annum (rank 7). The two cities witnessed a jump of 40.7 percent and 15.3 percent respectively in occupancy cost over the year.

Securing the second and the third spots were Moscow ($232.37 per sq. ft. per annum) and Tokyo where high demand and supply shortage have seen occupancy costs skyrocket over the year.

According to Anshuman Magazine, managing director, CB Richard Ellis, South Asia, while New Delhi climbed one rank over the year, Mumbai dropped from No.3 to No.4. "This drop is not due to a reduction in the rentals but because of significant rise in the rentals in Moscow and Tokyo," Magazine said.

The presence of Mumbai and New Delhi in the top 10 list indicates the tight supply of prime office space and increasing demands in these two cities, he added.

Interestingly, annual rent per sq. ft. in New York's Midtown Manhattan (rank 13) - $103.43 - was significantly lower than those in Singapore (rank 9) and Dubai (rank 10) - $139.31 and $128.49 respectively.

Even Hong Kong ($126.79) and Dublin ($126.60) were ranked above Midtown Manhattan at No.11 and 12 respectively.

However, Manhattan turned out to be more expensive than Madrid (rank 17; $96.64), Zurich (rank 18; $92.99) or Milan (rank 24; $85.41).

Also in the top 50 list were Geneva (rank 29; $78.43), Seoul (rank 36; $71.40), Rome (rank 37; $71.18), Munich (rank 40; $67.55), Barcelona (rank 45; $64.43) and Toronto-CBD (rank 47; $62.44).

China's Pudong and Puxi districts in Shanghai were ranked 39th and 50th respectively with occupancy costs per sq. ft. per annum at $68.45 and $61.26.

In another list, that of markets posting the fastest growing occupancy costs, Ho Chi Minh city in Vietnam was ranked 1st, witnessing a hike of $85.54 or 94 percent over the year. The second spot went to Moscow, which witnessed a 93 percent increase in the occupancy cost compared to the previous year. Singapore occupied the third spot with a growth urge of 86 percent.

"Office occupancy costs are continuing to defy sluggish economic conditions and the credit crunch, as they rise faster than global inflation," said Raymond Torto, CBRE's global chief economist, in a statement.

"These cost increases are dominated by emerging markets, caused by both supply and demand imbalance and the depreciation of the dollar relative to local currencies," Torto said.

However, "In some of these emerging markets, Class A office space is seriously lacking," he added.

American cities, surprisingly, did not rank in the top 10 of either of the lists - most expensive market or market with fastest growing occupancy costs. However, the "slowing economic situation in North America does not appear to have dampened occupancy cost growth rates," the report suggested.

"Growth rates among the North American markets in the top 50 rankings averaged 20.1 percent," it said. "However," it added, "the number of North American markets in our top 50 rankings fell from 19 in our last report to 16 as of the end of the first quarter of 2008."

Overall, Europe, Middle East and Africa (EMEA) dominated the list of markets with the fastest growing occupancy costs, accounting for five of the top 10 and 19 of the top 50 markets. Worldwide, 88 percent of the 173 office markets monitored posted higher occupancy costs.

The Global Market Rents report, which tracks world markets with the highest as well as fastest growing occupancy costs for the 12 months ended on March 3, 2008, is based on the semi-annual survey carried out by the Los Angeles-based property consultant on 173 countries worldwide.

TOP 10 MOST EXPENSIVE MARKETS:

(In US$ per sq. ft. per annum)

1. London (West End), England - $299.54

2. Moscow, Russia - $232.37

3. Tokyo (Inner Central), Japan - $220.25

4. Mumbai, India - $210.97

5. Tokyo (Outer Central), Japan - $175.35

6. London (City), England - $164.18

7. New Delhi, India - $145.16

8. Paris, France - $141.98

9. Singapore, Singapore - $139.31

10. Dubai, UAE - $128.49

TOP 10 MARKETS WITH FASTEST GROWING OCCUPANCY COSTS

(in local currency and measure)

1. Ho Chi Minh City, Vietnam (94.4 percent)

2. Moscow, Russia (92.7 percent)

3. Singapore, Singapore (86 percent)

4. Nicosia, Cyprus (58 percent)

5. Oslo, Norway (57.6 percent)

6. Tel Aviv, Israel (53.2 percent)

7. Dubai, United Arab Emirates (43.4 percent)

8. Mumbai, India (40.7 percent)

9. Manila, Philippines (32.7 percent)

10. Perth, Australia (32.3 percent)