Bucharest � two notches down in top of most expensive office-space locations across the world

Bucharest ranks 37th in the top of most expensive office locations, down two positions from last year, with Hong-Kong, Tokyo and London the most expensive locations for office spaces, reads the “Office Space Across the World 2009” report of Cushman & Wakefield.

For the first time in nine years, London was knocked from top spot, now taking up the third position. Thus, the rents fell 23% in West End, down to a median of 1.404 euros/sqm/year or 117 euros/month. The rents fell 19% in Tokyo in 2008, down to 1.649 euro/sqm/year, or 137.4 euros/sqm/month. The research found that the highest rents are in Hong-Kong, where the decrease stood at merely 4%, down to 1.742 euro/sqm/year, or 145.25 euro/sqm/month.

“Bucharest ranks 37th in the top of most expensive office locations in the world, with a total cost for office occupancy at 367 euro/sqm/year or 30.58 euro/sqm/month. The prime rents remained stable last year, at roughly same level as in 2007 (21 euro/sqm/month median). The other costs included in the total rent are taxes for services and car parking expenses. In case of car parking, the costs differ according to whether it is a central or a non-central location. These costs account for about 30% of the rent/sqm”, said Florin Sorea (photo), director of office department of Cushman&Wakefield Romania.

For the first time in ten years, Dublin glided outside the top ten locations for office spaces, down to 15th position, seeing the rental level fall furthest by 13% down to a 620 euros/sqm/year median, or 66 euros/sqm/month.

The ‘breakthroughs’ of the year 2008 were Dubai, that mounted on 5th position from eight, with rents 7% higher and Damascus, 2008’s new entry, taking its place at number 8.

“In Romania, as the majority of companies are seeing their turnover falling down, we will witness a cost reduction trend, including space rents. Combined with a growth trend of office stock, the rents will dive 10-12% or even by wide margin this year”, said Costel Florea, head of investment department at Cushman&Wakefield Romania.

As for investments in 2008, Dan Ionascu, the head of evaluation and advisory division at Cushman&Wakefield Romania, says the local market as target for investments in real estate was not very interesting for large funds. This was derived by the imbalanced climate in politics, law and money market that engendered massive fluctuations in terms of investment approach.

“The only large investment fund that actually had the intention, which failed in the end, to invest in Romania was EQT Partners that in September 2008 was the largest investor in the world, with total capitalization of 12 bln euros. There are other mature and attractive markets for investors: Russia, USA and Great Britain, as the investment’s vigor is not given by the locals but by the entire world”, said Dan Ionascu.

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