City of London office rents plunge 38%

Source : Business Times - 21 Apr 2009

It is now not among Europe’s top three most expensive office locations

The City of London has been knocked out of Europe’s top three most expensive office locations by Geneva and Paris, research by property consultants NB Real Estate and ONCOR International showed yesterday.

Average office rents in the City business district - Britain’s historic financial heartland - have fallen 38 per cent in the last 12 months to 593 euros (S$1159.30) per square metre, making it Europe’s sixth-most expensive office district.

City of London rents are now 157 euros cheaper per square metre than in the Triangle d’Or area of Paris, the neo-classical neighbourhood between the Champs-Elysees and the River Seine, which is often compared with London’s Mayfair district.

The West End of London remains the most expensive office district in Europe despite experiencing the largest fall in office rents in the past year, with 45 per cent wiped off its office rental values to 961 euros per square metre.

Office rents in Moscow and Geneva, Europe’s second and fourth-most expensive business locations, are now 873.3 euros and 623.1 euros per square metre respectively. Dublin takes fifth spot, with average rents of 600 euros per square metre.

Geneva and Zurich saw the biggest growth in rents in the last 12 months, the report said.

Geneva has seen a 14.6 per cent increase in the rental cost of office space and Zurich a 5.5 per cent increase in rents.

‘Swiss banks may have taken the axe to their London-based investment banking operations but as a whole their private banking sector has held up relatively well,’ said James Crisp, director at NB Real Estate.

‘Whilst the City of London and the West End now have a substantial overhang of spare office space, that does not seem to be the case in the major Swiss cities,’ he added.

Less than half the 16 European office locations covered by the report posted growth in rents in the past year, the weakest overall performance since 2004.

With the exception of London, Moscow office rents suffered the largest fall in Europe in the last 12 months, dropping 15 per cent on average.

‘Rents for prime offices in Moscow are still among the most expensive in Europe - how well Russia deals with its latest economic crisis will determine whether it stays in that position,’ Mr Crisp said. ‘Depreciation of the rouble suggests rents have further to fall,’ he said.