August 14, 2012
Led by Beijing, Asia emerged as the net winner in a new report by Cushman & Wakefield that ranked 100 office markets around the world.
In the spirit of the Olympics, Cushman & Wakefield has released a report on the top 100 global office markets, and found that Asia emerged as the overall champion.
The report, titled "Going for Gold in the Global Office Market," ranked office markets on three factors: fastest value growth over the past year, strongest rental or yield recovery since the global downturn, and highest actual values for these.
After conversion to reflect a comparable net basis, cities ranked in the three highest deciles were awarded medals as follows: top 10% - gold; next 10% - silver, last 10% - bronze.
According to Cushman & Wakefield, Beijing topped the table, winning "an impressive five out of six possible gold medals". This was attributed to the city's fast-paced recent growth which has contributed to a strong recovery that has seen the city sustain some of the highest rental and capital values of any market in the world.
Coming in second place was San Francisco, where rental vales were buoyed by strong demand from its tech-driven economy. In third place was Moscow, which showed strong recovery aided by commodity strength.
London and Shanghai were both ranked fourth, with the former enjoying a strong upturn in rents and capital values while being the host Olympic city.
Overall, Asia was the top performing region, winning more medals and more golds than the Americas and EMEA - which came in second and third place respectively.
According to Glenn Rufrano, Global President & CEO Cushman & Wakefield, "Major international sporting events are an opportunity for the host city to show off on the global stage and London has done just that - with its office market claiming a podium finish in our analysis."
"However what's interesting about this research is the truly global nature of the winners' table - with mature markets like San Francisco and Hong Kong in the mix but Beijing on top and other emerging markets such as Moscow, New Delhi and Sao Paulo right up there - and it's not as simple as saying the so-called "emerging" markets are seeing the growth and the "mature" markets have the highest values. We are seeing a real mixing of demand and activity which means we have a truly global market in which these old labels are being left behind."
Jim Underhill, CEO America's Cushman & Wakefield said, "The Americas enjoy their leading gold medal status driven by "faster" performance in rent and yield growth over the last year. The US and Canada lead with respect to yield compression while Latin America prevails in the rent growth category. New York tops the leader board for high capital values driven by global investment and occupier demand but San Francisco shines as the current star performer thanks to demand from technology firms which has fuelled strong rental growth."
Asia came out top for the highest rents and capital values sustained, with five out of the top 10 global markets. London and New York secured places high up on the list whilst Paris, Zurich and Geneva round out the top 10. Despite Beijing taking the overall top spot for performance, it was beaten by Tokyo and Hong Kong as the most expensive by rent and by Taipei and Hong Kong as the most expensive by yield.
Asia again stands out as the stronger market when it comes to the recovery seen since the end of the great recession, with aggregate office rental values up over 15% since 2009, led by mainland China followed by Hong Kong, Indonesia and Singapore.
Sanjay Verma, CEO Asia, Cushman & Wakefield, said that Asia's stronger performance attests to the region's resilient economic landscape that spurred broad-based improvements in the office sector last year which have continued into 2012. The growing clout of the region's growth markets can be seen in the above-average performance of a number of major markets led by Beijing, Shanghai and New Delhi.
"Of course, the region has not been immune to the recent worsening in the economic environment, with a few strongholds such as Hong Kong losing steam this year, but while some vulnerabilities exist across Asia, it would appear the economy as a whole will remain on a growth path that should still be sufficient to underpin gradual, steady progress in office fundamentals in most markets across the region," said Verma.
According to David Hutchings, head of EMEA Research and author of the report, "Performance has slowed in general as uncertainty has increased in most areas of the global economy in recent months but we still have an international office market where occupiers are needing to seek out better space and locations to help them compete, work better and meet their sustainability targets."
"With the cost of that space only likely to increase as supply levels fall, any pause in the market as decision making slows is an opportunity for winning businesses to take advantage and steal a march on their competitors - and that's what we're starting to see in some areas. As in sport, the most successful businesses are not always the fastest but they are likely to be the boldest and the best prepared!"
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