Beijing’s persistent smog seems to have put a dent in the city’s appeal to tourists. Last year Beijing Youth Daily reported that visitors to Beijing were down 50 percent in the first nine months of 2013 compared with a year earlier; the newspaper attributed the decline at least in part to the city’s infamously bad air quality. Hiring managers in China also report greater difficulty attracting mid-career expats to Beijing, especially those with young children.
But the blanket of toxic smog hasn’t hurt Beijing’s office market, which jumped up three notches on a global ranking by Cushman & Wakefield to become the fourth most expensive location to rent office space in the world. According to the real estate firm’s “Office Space Around the World 2014” report, office space in Beijing’s Central Business District costs on average 1,027 Euros ($1,412) per square meter per year.
That’s more expensive than number-five ranked central Tokyo (1,003 Euros; $1,380) or number-six ranked Madison & Fifth Avenues in New York (993 Euros; $1,366). Cushman & Wakefield’s rankings took into consideration both published rental rates and “additional costs,” which includes agent fees and other costs of doing business.
London (West End) remains the world’s most expensive city in which to rent office space, with total costs running 2,122 Euros ($2,919) per square meters per year. Hong Kong, home to the priciest office space in Asia, came in second globally (1,432 Euros; $1,970). Moscow ranked third (1,092 Euros; $1,502).
The cities included in the ranking that experienced the highest annual growth in office rental rates were both in South Africa: Rental rates in Durban’s Central Business District spiked 40 percent, and rates in Sandton, the financial district of Johannesburg, rose 44 percent. Meanwhile downtown office rates in both Jakarta and Bangkok increased a hefty 20 percent.
The Cushman & Wakefield ranking, which does not take into account the economic impacts of recent unrest in the Ukraine, lists Kiev as the world’s 39th most expensive office rental market — one notch above Athens.
Larson is a Bloomberg Businessweek contributor.
