London's West End is the world's most expensive office market for the second year in a row, beating its runner-up Hong Kong, according to a report from Cushman & Wakefield.
Office rents in West End increased by five percent in 2013, due to strong demand and a dwindling supply of high quality space. Rents haven't changed much in Hong Kong, creating a further gap between Hong Kong Central and London's West End.
The average rent for London in 2013 was $271.61, followed by Hong Kong's $183.32. Moscow came in third with an average rent of $139.80, with Beijing and Tokyo rounding out the top five.
"London remains attractive for many international businesses as its global appeal continues to grow," Digby Flower, Cushman & Wakefield's UK chief executive and head of London markets, said in the report. "With prime space at a premium in the West End and a steady demand for offices from across all sectors, significant rental growth can be anticipated in 2014."
Worldwide office rents increased by three percent in 2013, marking a similar rent performance for the third consecutive year. However, some areas such as Africa and the Middle East recorded higher increases, with rents growing by as much as 10 percent.
In Europe, regional rents increased by three percent, the highest regional increase since before the economic downturn, C&W reports.
South Africa recorded the highest rental growth in the EMEA region in 2013, with prime rents increasing by almost 30 percent.
"Looking ahead for EMEA, the overall lack of high quality space is expected to push many occupiers towards moving sooner rather than later, as they look to secure deals on the limited supply of quality space that is available," James Young, Cushman & Wakefield's head of EMEA offices, said in the report. "With the development pipeline anticipated to continue at low levels until the latter part of 2014, prime rents are likely to remain under pressure."
Rental growth in the Americas was mostly subdued, with a regional increase of just 1 percent. Key markets like Brazil and Argentina have suffered from ongoing economic uncertainty.
Rental growth across Asia Pacific was more subdued in 2013. However, the region is well represented in the list of world's most expensive office markets.
"The key economies of China, Japan and Southeast Asia are anticipated to drive the region forward, with demand for office space particularly in these countries gaining momentum over the year," the report states.