NEW YORK TAKES TOP SPOT
For the past two and a half years, London has had the dubious honour of being the most expensive world city to rent accommodation. This has reflected the strength of its economy and high demand for space from a wide variety of occupiers. Last December, New York rents were snapping at London’s heels, but now New York’s live-work accommodation costs are the highest of Savills World Cities, ahead of Hong Kong and well ahead of London.
Falling financial sector office rents are behind a 0.5% fall in London’s overall live-work costs in sterling terms but the impact of currency falls post Brexit has made London much more competitive on the world stage. Continued uncertainty surrounding the EU exit terms has depreciated sterling to levels not seen in 168 years. After collecting the rental data in June, the EU referendum vote further reduced London’s occupation costs dramatically. Live-work costs have fallen, in dollar terms, by 19% since December 2015 (see fig.1). This puts London’s costs much closer to those of Tokyo and Paris. Of the cities we track, only Lagos observed a larger deflation in rental costs over the same period, at -30%. Singapore, Dubai, Moscow and Shanghai saw smaller falls in their space costs, ranging from -2% to -9%.
Meanwhile, rents for both residential and office properties in New York rose between December and June 2016 while the greenback strengthened. Even though nominal office rental growth is slowing, overall accommodation costs rose by 2%. The annual cost of living and work space in New York is now $114,010 per employee. Hong Kong is now way ahead of London’s $90,857 at $100,996. The biggest cost growth in dollar terms was seen in Tokyo where a combination of the strong yen and nominal prices pushed them up by 21%.