Global office rents on the rise

Economic growth in India has led to office rent rises

London and Mumbai have the world's priciest office rents, according to a report from commercial real estate broker CB Richard Ellis.

A top-quality office in London's West End sets tenants back $328.91 per square foot, up 41.9% on the year.

In Mumbai, the same space costs $189.51, a 55% rise on the year.

The cost of renting a nice office is on the rise globally, partly fuelled by booming Asian economies, with the fastest growth seen in Singapore.

A square foot of nice office space in Singapore is about $102.37, up 82.6%.

The vast majority of the 171 cities surveyed saw rents of prime property rise in the year ending 30 September, the report said.

At $180.78, Moscow was number four in global rankings, following the City of London, where average top rents are $180.80 per square foot.

London 'full'

Rising rents in London's West End have been driven by demand from hedge funds and financial firms for the nicest offices.

Rents have also been buoyed by the shortage of space in central London, CBRE said.

"One of the main reasons is that the West End is fairly close to full," said, Nick Axford, executive director at CBRE.

Most expensive offices per sq. ft London, West End, $328.91 Mumbai, India, $189.51 London, City, $180.80 Moscow, $180.78 Tokyo, Inner Central, $178.61 Tokyo, Outer Central, $154.56 Paris $127.48 New Delhi, $126.73 Dublin, $113.66 Hong Kong, $106.31 Source: CBRE report including rent, local taxes and service charges

The most expensive office space in America is in New York's midtown, which registers twelfth globally.

The sub-prime debt crisis in the US may have hit the housing sector, but it is too early to say what impact it will have on the office rental market, the report said.

Banks and finance firms - hard hit by the crisis - may be loathe to take new space, possibly affecting financial centres such as Frankfurt, added Axford.

But the report added: "Solid leasing fundamentals in major global markets continue to make commercial real estate an attractive asset class during the credit market crunch."

"Modest construction levels, lower vacancy and availability rates have increased upward pressure on rents", the report said.