Global Office Market: Affordability and Extravagance
According to a 2011 study conducted by global real estate consultant DTZ, several Indian cities have secured positions among the world's most affordable office locations. The report, titled ‘Global Occupancy Costs – Offices’, highlighted Hyderabad, Chennai, and Pune among the top five, following Surabaya (Indonesia) and Qingdao (China) which ranked first and second respectively.
DTZ stated, “While Tier II cities in India and China dominate the list of top 10 most affordable markets globally, Surabaya in Indonesia remains number one.” Meanwhile, the consultant also identified the five most expensive office markets as Hong Kong, London, Geneva, Tokyo, and Zurich.
Rental Comparisons: A Stark Contrast
The cost disparity between these markets is considerable. The DTZ study reported average annual workstation rentals of $1,680 in Surabaya and $2,380 in Qingdao during 2011. Hyderabad, Chennai, and Pune followed closely, with rentals of $2,430, $2,570, and $2,590 per workstation respectively.
At the other end of the spectrum, Hong Kong commanded a staggering $25,160 per workstation annually, trailed by London at $22,590 and Geneva at $18,740.
Market Predictions: Potential for Savings
Looking ahead, DTZ predicted rental declines in many global cities for 2012. “Under the downside scenario, 2012 offers occupiers a window of opportunity in which to realise cost savings as rents decline… In the top five least affordable cities of Paris, Tokyo, Geneva, London and Hong Kong, office rents fall in 2012 under the euro break-up scenario,” it added. The report further suggested significant rental decreases in Rome and Milan over 2012 and 2013, potentially benefiting occupiers in these locations. Moreover, DTZ anticipated potential double-digit rental drops in the more budget-friendly Indian cities throughout the year.