AT S$11 per square foot (psf) per month, or US$103 psf per year, the extended central business district comprising Raffles Place and Marina Bay is the eighth most expensive office area in the world, according to a Jones Lang LaSalle study.
Taking into account quoted rents from only premium office space in top sub-markets, Singapore was inched out by other Asian locations such as Hong Kong's Central which commanded rents of HK$105 psf per month (US$162 psf per year) and Beijing's Finance Street where corporates paid rents of 750 yuan per square metre per month (US$137 psf per year).
Hong Kong and Beijing snagged second and third places, respectively for the most expensive office areas in the world.
The top spot, St James's in London, cost £125 psf per year, or US$194 psf per year.
"Despite the upheavals in financial markets in recent years, the research points to the financial sector as the primary demand-driver in these top locations. A general lack of available space adds an aura of exclusivity in these supply-constrained areas, luring emerging companies in other sectors, as well as retail, hospitality and tourism attractions," noted JLL.
Jeremy Kelly, JLL's director of research, said that he expects the same set of global cities to continue to dominate the list in the years to come, although the order will change with sector-driven market conditions and the continued rise of the technology and mobile sectors.
Menlo Park, Silicon Valley, California, for instance, which ranked fifth at US$111 psf per year, is expected to climb the ranks as tech-driven demand continues to push up rental rates. "With premium rents in the central business districts of a number of US cities now increasing, we can expect to see additional US markets ranking among the most expensive over the next 24 months," he added.
Market dynamics, however, can also have the converse effect.
"Tokyo was the most expensive market for office space in the world for many years, but it was hit hard by the global financial crisis and has been surpassed by other Asian power cities," noted Mr Kelly.
Ranked 10th on the list, Tokyo's Marunouchi, which is located on the west side of Tokyo Station, achieved rents of 28,600 yen per tsubo (a unit of measure for area) per month (US$98 psf per year).
The list, compiled by JLL, does not include several emerging and frontier cities where severe supply issues create exceptionally high rents, such as Rio de Janeiro and Lagos.
This is because many of these "thin" markets - Luanda, Angola, for instance, have asking rents as high as US$200 psf - are not directly comparable to the more mature markets featured on the list.
Source: Business Times, 25 Oct 2013