The cost of accommodating a workforce in both residential and commercial premises in world cities has fallen over the past year. The Savills Executive Unit – a workforce of 14 people and their families – now costs an average of US$75,738 per year per person in rents and property costs, compared to US$78,831 a year previously.
A significant component of this falling cost is the US dollar’s appreciation against other world currencies, which makes annual property costs look cheaper in dollar terms. But, even in local currencies, several countries have seen falling rents, while others are experiencing static or low growth. This is good news for companies who occupy office space and have to house their employees – or pay wages commensurate with local housing costs. These companies had seen the total cost of living and working accommodation rise by 9.4% in local currency terms during the five years to December 2013, but are now enjoying dollar costs back to 2011 levels.
The three most expensive cities – London, Hong Kong and New York – are distinctly more expensive than the rest, revealing their status as dominant world-class metropolises (see fig. 5). Rents in these cities have been pushed to high levels in the past by a supply-demand mismatch, but are sustained by the very strong economic growth and rewards companies have enjoyed from locating in these cities.