In 1981, The Specials, in their seminal classic ‘Ghost Town’, were particularly scathing about London. This town, is coming like a ghost town. All the clubs have been closed down. They did have a point. There were just under ten million unemployed, interest rates by year-end were north of 14% and Bucks Fizz won the Eurovision Song Contest.
Things were bleak.
But not any more. Just thirty-nine short years later in 2020, London—specifically the West End—overtook Hong Kong as the world’s most expensive commercial property market and the latest Savills Prime Office Costs analysis for Q2 2023 has ‘up West’ maintaining the global top spot.
London Reigns
In the competitive world of global commercial real estate, London has kept its coveted position as the epicentre of high-value commercial property. According to recent data released by Savills, London continues to top the list of the world’s most expensive commercial property locations.
The city’s unparalleled global appeal, robust economy, and status as a financial hub contribute to its consistently high commercial property values. Despite geopolitical uncertainties and the impacts of the global pandemic, investors worldwide continue to see London as a safe and resilient investment destination. The city’s commercial properties offer not just prestige, but also promising returns, reinforcing London’s standing in the international real estate market.
The top 10 most expensive cities are as follows. Please note the published prices are in USD with the conversion to GBP correct as of 2nd October 2023.
London (West End) | $259.88 | £213.97
Hong Kong | $242.80 | £199.91
New York (Midtown) | $170.75 | £140.59
London (City) | $167.51 | £137.92
Tokyo | $159.97 | £131.71
Singapore | $144.25 | £118.77
Beijing | $127.68 | £105.12
Dubai | $120.72 | £99.39
Paris | $119.85 | £98.68
Shanghai | $116.63 | £96.03
According to the report, the growth in net effective costs increased slightly again this quarter by 0.3%, making it the second consecutive increase this year. This trend indicates that property owners are becoming more confident as global demand continues to grow.
In the second quarter, yearly rent across various markets increased by 0.4%. Fit-out costs are still going up, but at a slower rate. This quarter they rose by 1.2% as post-pandemic supply issues begin to settle and other building costs aren’t growing as fast.
In Asia Pacific, the markets are more stable compared to other regions. Most people there are still working from offices, so demand for space hasn’t changed much, leading to a steady price for office spaces. Most markets in this region saw a cost growth of 0–1% this quarter. However, Vietnam’s Ho Chi Minh City stood out with a 4.6% increase in costs due to both rent and renovation costs rising.
In Europe and the Americas, changes in cost were even smaller in Q2 2023, with most markets seeing little growth in cost. Dubai and Paris are exceptions, experiencing increases in renovation costs, and Dubai also saw some rent increases. In the US, rental costs have largely remained the same, although some premium buildings in prime locations are beginning to see slight rent increases. Despite this, landlords are still offering significant concessions to attract tenants, effectively offsetting these increases in rent.
For all your central London property requirements please contact us on 020 7629 1088 or email info@bdgsp.co.uk.