Office rents get cheaper, but not in Istanbul

Posted on 14 February 2011

Date: 03/12/2009
Office rents get cheaper, but not in Istanbul

Construction cranes stand above the Trump Towers Istanbul in Turkey’s largest city.

The world’s most expensive office markets got a little cheaper this year, but Istanbul, Turkey’s most populous city, was among the few cities in which office rent expenses surged.

More than 130 cities worldwide experienced declines in rent expenses in the year ending Sept. 30, the CB Richard Ellis Group said in a report released Tuesday.

Almost 50 cities reported declines of more than 10 percent: Rental costs fell about 30 percent in midtown Manhattan, 53 percent in Singapore and 41 percent in central Hong Kong. Overall, rents fell an average 7.7 percent across 179 markets worldwide.

Istanbul ranked among the top five cities in which rents increased most, with 9 percent. Office rents in Aberdeen, Scotland rose 12.3 percent, while rents in Rio de Janeiro increased 12.1 percent.

The average office rent in Istanbul stood at an annual price of $77.44 per square foot, or 47.46 euros per square meters per month. With this price, the city ranked 19th in the list of the most expensive office markets as of Sept. 30.

“The places that went up the fastest and highest also came down the fastest and at greater depth,” Bloomberg quoted Raymond Torto, Boston-based chief economist for CB Richard Ellis, as saying. “You party Saturday night and you pay for it on Sunday morning. That’s true across the globe.”

The global recession and credit crisis are pushing down office rents as companies pare down jobs. About 1.93 million job cuts have been announced worldwide this year, data compiled by Bloomberg shows. In the U.S., the unemployment rate jumped to 10.2 percent in October, the highest level since 1983.

Singapore and Hong Kong are struggling to pull themselves up from recession, according to CB Richard Ellis. The pace of rent declines in Singapore eased in the third quarter, suggesting “an improvement in business confidence,” the report said.

In Hong Kong, rents for top-quality space ended a yearlong decline in the third quarter for similar reasons, according to the survey.

London’s West End district retained its position as the world’s most expensive office location, CB Richard Ellis said. Offices there cost $184.85 a square foot, down 26 percent from a year ago in U.S. dollars.

With the exception of CB Richard Ellis’s May survey, when London was passed by inner central Tokyo, the broker estimates that the West End has held the title of the world’s most expensive office site since 2001.

CB Richard Ellis defines occupancy costs as rental charges including taxes and service fees.

In another development, the Turkish Finance Ministry aims to have significant income from real estate sales next year, according to business daily Referans.

The newspaper reported on Wednesday that the ministry targets 500 million Turkish Liras in revenues in 2010. According to the ministry’s performance program, the 2009 target stood at 250 million liras.

The Turkish Treasury currently owns more than 3.1 million units of property. More than 113,000 of these are buildings, 381,000 are plots, 678,000 are lands and more than 1.18 million are farm fields.

2 December 2009 Quoted from Hurriyet Daily News

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