Sandton offices: pricey in world terms

Johannesburg's commercial centre Sandton is getting expensive quickly compared to other hot office spots on the globe.

That's according to new research by CBRE (CB Richard Ellis), which puts London's West End in slot one as the world's most expensive office market for the 12 months ended 31 March. Rapidly-rising Moscow is in second place.

South Africa is not included in the world's top 50 most expensive office markets, however Sandton does make an appearance in the top 50 markets with fastest-growing occupancy costs as of May.

According to the research Sandton occupancy costs grew by not far off 18%, higher than cities like Paris, France, Bristol in England and Athens in Greece. The figure is based on local currency and measure.

Sandton's increase although high in world terms is still a far cry from the cities that top the chart. Ho Chi Minh City, Vietnam, which had the fastest-growing occupancy costs, produced an increase of a staggering 94%.

Dr Raymond Torto, CBRE's global chief economist, noted when he released the figures that "office occupancy costs are continuing to defy sluggish economic conditions and the credit crunch, as they rise faster than global inflation".

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

Another office market trend highlighted by CBRE was that Singapore's pace of rental growth is moderating "and we sense that the peak of the market is close at hand". In addition, a range of alternative lower cost premises options have been bolstered there as Singapore's office market matures.

Singapore made an appearance in the top 10 most expensive cities for offices along with Dubai for the first time in the survey.

Africa did not feature in the top destinations singled out in the survey of about 173 centres, except for that appearance by Sandton.

The survey examined occupancy cost, which represents rent, local taxes and service charges.

World’s most expensive office markets:

 

World’s fastest-growing occupancy costs:

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