London is the most expensive city in the world in which to accommodate staff, pushing Hong Kong, which had been number one for five years, into second place, according to the Savills Live/Work Index Top 12 World Cities, which was released on Tuesday.
Declining residential rents plus a weakening currency are the two main factors driving Hong Kong’s slip into the second spot, while the pound sterling’s appreciation against the US dollar and rising office rents until June 2014 helped push London to the top of the league table.
The cost of sending an executive to London, including office space he/she might occupy, is about $120,568 per year, compared to $115,717 in Hong Kong, $107,782 in New York, and $105,550 in Paris.
London still has some way to go before reaching Hong Kong’s peak live/work cost in 2011 of $128,000 per year.
New York is in third place, while Paris slips to fourth. However, for tech companies Paris continues being the most expensive city. According to Savill “Space for creatives in the French capital is simply in shorter supply than for the finance industry.”
While rents have risen in Tokyo, the yen has depreciated. Live/work costs in Japan’s capital have declined by 23%, pushing it to fifth place from third in the rankings.
The report authors wrote regarding Tokyo “The ‘golden confluence’ of improving economy, rising rents and better competitiveness makes the city increasingly attractive to investors, especially those seeking income.”
Comparatively affordable cities, such as Sydney and Rio de Janeiro have seen costs rise by 58% and 86% respectively since 2008.
With India’s economic growth faltering for a few years, Mumbai’s costs have fallen 21% in dollar terms since 2008.
Volatile work/live costs in mid-table Dubai slid 16% since 2008, making the Emirate a more affordable place today than at the height of the boom.
Savill’s Director of World Research, Yolande Barnes, said:
“This year has seen much more modest real estate price growth in nearly all our world cities, and some have shown small falls. We expect this subdued trend to continue as investor interest and market activity shifts to second-tier cities.”
“This lower level of price growth means that currency fluctuations have produced some of the biggest changes in our rankings, which are expressed in dollar terms. For multinationals looking at their local costs, it is this which is likely to exercise them more than property markets over the next year.”