The West End of London has been rated as the most expensive place in the world to rent office space, with the recovery of financial markets fuelling fresh demand.
Rents have risen 31 per cent – each square foot of West End office space cost £85 by the end of 2010, displacing Tokyo as the most expensive city.
The City of London also made it into the top 10, rising five places to become the seventh most expensive with the average cost of a square foot of office space at £55, according to the Global Real Estate Markets annual report by property agents Knight Frank.
Rents in the West End are thought to have continued to rise this year with a square foot now costing more than £90 amid renewed demand from media companies including Google and Apple. "At the start of 2010, prime office rents were still falling in a significant number of the continent's markets but by the end of the year, rents had either stabilised or begun to recover in most markets," the report stated.
"The central London office market has led the recovery in demand and rental values. Take-up improved strongly in 2010, largely as a result of increased demand from the financial sector. London saw the most dramatic rise in prime rents in Europe."
Tokyo had taken over from London as the world's most expensive place for offices after the collapse of Lehman Brothers in 2009.
Hong Kong was the third most expensive city, up from 10th in 2009, followed by Moscow. Other top 10 cities were Paris, Singapore, Sydney, Mumbai and Lagos. Manhattan is the most expensive place in the US, at 22nd.
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