Dubai remained the Middle East's highest-priced office market but rates are nearly a third that being charged in London's West End, a CBRE survey revealed on Monday.
CBRE Research’s semi-annual Global Prime Office Occupancy Costs survey ranked Dubai 23rd in the list of the world's most expensive office markets.
It said average charges in the emirate were $92.56 per sq ft per year in the third quarter of 2014 but this compared to $274 being charged in London's West End, the world's most expensive market.
Dubai was the only Middle East market ranked in the world's 50 most expensive office markets.
Earlier this month, Cluttons said a shortage of prime office space in Dubai, which is being underpinned by robust demand, has translated into strong upward pressure on rents across the city.
The real estate consultancy said a rapidly diminishing supply of Grade A space in more centrally located submarkets and free zones is also driving up commercial rents in the emirate.
Cluttons’ Dubai Winter 2014 Commercial Market Outlook report said that during the third quarter of 2014, rents for prime office space reached AED250 ($68) per square foot, which represents a near 14 percent rise on Q1 and a 25 percent increase on the same time last year.
The CBRE study also found that prime rents are rising fastest in the Americas, where real estate fundamentals continue to improve. Overall, the US accounted for five of the 10 markets with the fastest growing prime occupancy costs.
London West End topped the list, followed by Hong Kong (Central), Beijing (Finance Street), Beijing (Central Business District) and Moscow.
The change in prime office occupancy costs mirrored the gradual, multi-speed recovery of the global economy. Global prime office occupancy costs rose 2.5 percent year-over-year, led by the Americas (up 4.1 percent) and Asia Pacific (up 2.8 percent). Meanwhile, EMEA was essentially flat, edging up 0.3 percent year-over-year.
“We expect the gradual recovery of the global economy to continue, leading to better hiring rates and further reduction in the availability of space across most markets over the near term,” said Richard Barkham, Global Chief Economist, CBRE.
“In this environment, we expect occupancy costs to continue rising from current levels, further limiting options for occupiers. Technology, quality and flexibility are expected to increasingly come into consideration in space use and location decisions, as occupiers will seek to contain costs and improve productivity.”
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