There can be significant differences between the headline rent on commercial premises and the total costs that tenants end up paying. In New York, for example, although the basic rent for an executive unit operating in a creative industry is the fifth most expensive in the world, on a £ per sq. ft basis, this rises to the second when whole space and associated costs like local taxes, letting costs and service charges are considered. These extra costs add 53% to the headline rent.

London is another city where headline rents per sq. ft are very high and additional costs can significantly add to real-estate overheads. These conspire to make London’s whole space costs the second most expensive of the 10 cities for a small financial company, such as a hedge fund, locating in the most prime district of Mayfair. However, London offers a much wider range of rental levels than some of our world cities and therefore is among the cheapest cities for a small creative company start-up. Paris, on the other hand, looks very cheap for the financial unit, ranking third cheapest of the 10. However, it has a much smaller range of rent levels across different geographies meaning that it is the third most expensive for the creative company.

As seems to be usual now in all our global real estate rankings, Hong Kong ranks as the number one most expensive city for both types of company, by a big margin, for a whole office (as opposed to per sq. ft). Hong Kong’s offices are particularly expensive for small companies in the prestigious central financial district and total costs here are two and a half times the average for the other 10 cities – and nearly twice that of its nearest rivals.

This is despite Hong Kong having the lowest additional, hidden costs of any city. Of the 10 global cities, Sydney, Shanghai and Mumbai have the lowest associated real estate costs, while London, New York, Moscow and Singapore have the highest.

Taken from
Insights: World Cities Review Spring 2013

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