Commercial property rents were burdened by weakness in the global economy, corporate scandals and worries of a Middle East conflict, according to the report by property consultants DTZ Debenham Tie Leung (DTZ).

With the depreciation of the US dollar against the euro and the British pound, six of the 10 most expensive locations are in Western Europe, while New York's Midtown district is the only US location on the list.

Three new entrants to the top 10 in 2002, were Birmingham, Moscow and Manchster where occupancy costs on nationally quoted terms increased between 3.0 and 16 percent.

'Office markets in most major cities weakened in 2002 despite the initial promise of stability on the back of stronger economic performance in the year,' DTZ said.

'Cost containment remained a major consideration for occupiers as continued corporate restructuring and downsizing, accounting scandals, the threat of war in the Middle East and the lingering effects of September 11, left most global economies with weaker than expected performances.'

DTZ's annual report covering 92 business districts in 44 countries noted languid leasing activity, smaller transactions and falling occupancy levels were prevalent.

'With the deferment of major real estate decisions, office rents suffered as demand for office space failed to keep pace with supply,' it said.

'High levels of second hand space being marketed by lessees remains a key feature in many cities.'

But there were cities that bucked the sombre environment, namely Auckland, Guangzhou and Moscow 'where demand was underpinned by a strong domestic economy and well diversified demand.'

The top 10 most expensive office districts in the world, with prices in US dollars per square foot per annum are London's West End (146.70), London City (118.60), Tokyo's Central Five Wards (91.90), Paris (81.40), Edinburgh (67.30), Birmingham (64.90), New York City's Midtown (62.80), Moscow (62.30), Hong Kong (59.30) and Manchester (58.50).

Following Tokyo's Central Five Wards and Hong Kong in the Asia-Pacific region, the next most expensive office rents are in Tokyo's Outer Wards (54.60), Bombay (50.00), Seoul (43.80), Beijing (40.80), Sydney (39.20), Taipei (37.20), Singapore (34.40) and Shanghai's Pudong district (32.30).

DTZ said office occupancy costs were likely to remain competitive in most Asian cities 'as substantial new supply remains a common theme, exacerbated by lower demand from both MNCs (multinational companies) and domestic companies.'
 
Sapa-AFP