Cheap and cheerful

The pricetag of EUR 331 (zł.1,224) per sqm per year for office space in the Polish capital is a fraction of the EUR 1,640 (zł.6,454) that the average office tenant has to stump up for the most expensive office address in Europe, in London's Mayfair. According to Office Space Across the World, a report by Cushman & Wakefield (CW), Hong Kong with EUR 1,200 (zł.4,722) is second, followed by Tokyo at EUR 1,170 (zł.297).

"The cost of occupying office space in the world's top locations went up by 4.3 percent last year - a healthy performance compared with the 1.2-percent growth in last year's ranking and above the global economic growth rate of 3.3 percent," says Elaine Rossall, the head of business space research and consultancy, European division of CW.

In 2005 it was the Asia-Pacific region that recorded the best results, with rental levels growing by 15.6 percent. It was followed by Africa and the Middle East (13.2 percent), Latin America and Mexico (seven percent), and finally Europe, with 1.5 percent. "The European locations became more competitive last year having generally moved down the ranking. In many cases this was not because of any falls in rents, but because of the rise in the ranking of the non-European locations, especially those favoured by the stronger dollar rate," says Rossall.

Analysts point to the impressive promotion of Hong Kong, which last year was only fourth. The city is leading in the ranking of rental prices, recording increases in the occupancy costs and rent levels. "The Hong Kong office market has been on an upswing for more than two years. This strong performance is largely attributed to buoyant demand from companies expanding and upgrading their office requirements, particularly in the banking and finance sector," said James Fisher, managing director of CW's Hong Kong office.

Interestingly, Poland also lost its position as the most expensive office location in the CEE region. In comparison with the previous ranking, the city has fallen by nine positions and is now overtaken by Budapest. With the drop in the vacancy rate to eight percent, which is the lowest level for over five years, CW forecasts that the prospects for the office market in Poland are positive in the short term. Although the players on the Polish market are hoping for rents to increase, CW specialists predict the biggest growth in the Asia-Pacific region.