Dublin's office rents down to 44th in world rankings
Dublin's prime offices have dropped sharply in world rankings in line with the fall in Dublin rents.
With prime rents down to an average of €325 per sqm, its ranking in global office markets has fallen to 44th most expensive out of 50 cities surveyed in 2011.
According to the survey by Knight Frank, Dublin dropped 16 places in the rankings from 28th place in 2010 and is now just one euro above the cost for prime rents in Madrid and is also ahead of San Francisco, Leeds, Warsaw, Brussels and Vienna.
But it is also below Riyadh in Saudi Arabia, which retained its 43rd position from the previous year.
The survey also shows that Central Hong Kong overtook London's West End as the location with the highest prime office rents in the world during 2011.
Hong Kong's rise to the top of the ranking is a result of rapid rental growth in the first half of 2011.
While there was evidence that rents had peaked in the second half of the year, Grade A rents in Central stood at HK$1,046 per sqm per month in Q4, up 28pc up on 12 months earlier.
However, with office demand weakening, Grade A rents are forecast to soften in 2012.
Prime office rental growth in London (West End) slowed in 2011, after an exceptional increase of 31pc was recorded in 2010. Prime office rents rose by 9pc in H1 2011, to UK£92.50 per sq ft p.a., but remained unchanged in H2 with leasing activity remaining fairly subdued due to wider uncertainty in the UK economy.
Tokyo fell from second to third place in the ranking, and rents in the Japanese capital continue to come under moderate downward pressure as cautious tenants seek to reduce their occupation costs.
The top 10 is completed by the major established financial centres of Paris, Singapore, London (City), Geneva and Sydney, as well as two rapidly emerging office markets, Moscow and Perth, Australia.
Perth is a new entrant into the top 10, after seeing strong rental growth on the back of demand generated by Western Australia's booming resources sector and the falling availability of prime space.
The biggest mover in the top 50 is Beijing, which rises by 29 places to 19th position.
Prime office rents in the Chinese capital rose by an extraordinary 46pc in 2011 to RMB320 per sqm per month (c.UK£36.27 per sq ft p.a.).
The major office markets of mainland China have seen robust levels of leasing activity and falling vacancy rates, and double-digit prime rental growth is forecast for both Beijing and Shanghai in 2012.
Other hotspots for office rental growth in 2011 included the US markets San Francisco, where demand from the technology sector helped to push Class A rents up by 24pc to US$37.75 per sq ft p.a. (c.UK£24.42 per sq ft p.a.), and Manhattan, which saw Class A rents increase by 12pc to US$64.36 per sq ft p.a. (c.UK£41.64 per sq ft p.a.).
There is a mixed outlook for the top 50 markets in 2012, with rents forecast to rise in 18 of them, remain broadly flat in 21, but to fall in 11 locations.
Among the markets where rents are most clearly under downward pressure are those in European economies affected by the sovereign debt crisis, including Madrid, and Asian markets where availability is high, such as Ho Chi Minh City.
Matthew Colbourne, senior international research analyst, commented: "Office occupiers remain cautious in many international markets, particularly with concerns over the strength of the global economy, and the future of the Eurozone, resurfacing in recent months.
The pace of prime office rental growth in Europe slowed significantly in the second half of 2011, with rents remaining essentially flat in markets such as London (West End) and Frankfurt.
Asian cities are experiencing mixed fortunes; while confidence remains high in mainland China, falling office rents were observed in late 2011 in markets dependent on demand from international financial occupiers, such as Hong Kong and Singapore."
Andrew Bugg, head of global corporate services, EMEA, said: "Business strategies continue to be focussed on increased efficiencies and cost savings, especially with increased M&A activity, whilst the workplace follows its trend towards activity-based working in response to the arrival of Generation Y in the workforce.
Occupiers continue to seek consolidation opportunities and flexibility on commitment given the changes in structure and reduced availability of high quality space.
Major decisions may be on hold, but the perceived importance of London versus the Eurozone should lead to certainty on strategy in European markets."