The Middle East and Africa and Central and Eastern Europe (CEE) regions are the only two pockets of growth in office occupancy costs globally, according to a study of global office occupancy costs by London-based real estate advisor DTZ.
The Middle East and Africa showed robust growth of 28 percent driving it up to an average of $10,310 per workspace per annum and becoming the world’s second most expensive region behind Western Europe, which saw a 10 percent decline to $10,750. Dubai and Abu Dhabi both landed in the top ten most expensive cities for the first time, in fourth and eighth places respectively. Dubai’s occupancy costs jumped 43 percent and Abu Dhabi jumped by an impressive 64 percent, giving it the top increase of 2008.
CEE grew by a more modest 11 percent to $8,850, landing it in fourth place behind North America’s average of $8,670. The region was led by Moscow’s 16 percent growth to an average cost of $18,760 per workspace per annum resulting from growth in the commodities sector during the first half of 2008 and a lack of new office supply.
Asia Pacific comes in fifth at $6,950 despite being home to Tokyo, the world’s most expensive business district as well as fellow top 10 locations Hong Kong and Singapore.
Central and South America remains the world’s cheapest region for office space and experienced a cost contraction of 8 percent to $4,100. The region’s most expensive city, Sao Paolo, saw costs decline by 14 percent mostly due to currency depreciation. Mexico was the region’s hardest hit nation. Costs in Cancun dropped 22 percent and costs in Guadalajara and Mexico City dropped 21 percent each.
All regions are preparing for a rocky 2009, with 78 percent of the survey’s 114 business districts expecting a decline in occupancy costs, 19 percent expecting stability and only 3 percent of districts expecting a slight increase. The expectation of increases is concentrated in the Middle East and Africa, where 30 percent of business districts expect costs to rise.