Office rentals upturn likely

While it remains true that the effects of the recession on the world office market are likely to be felt for at least another three to four years a study of the Knight Frank global office rental review will cheer the property trend watcher, says Lanice Steward, Managing Director of Anne Porter Properties, Knight Frank’s South African associate.

The report, she says, reveals that in almost half the major cities of the world rentals are set to rise this year.

Steward commented that South African commercial rentals, although hard hit, fared better than most of the larger cities elsewhere in the 2009 downturn.

“Calculating in Euros, London’s West End office rentals experienced falls of more than 20%,” said Steward, “In Hong Kong, Dubai and St. Petersburg the falls were over 30% and Singapore saw rents halved. In New York there was a 45% decline.”

However, said Steward, the Knight Frank survey indicates that 40% of global city office rentals are now rising and another 20% will see no further declines this year. Tokyo, which at the moment has the most expensive office rentals in the world, is not expected to undergo any further declines and London’s West End, major European cities, Hong Kong and the bigger cities of China can all look forward to rises this year. London City precinct, in fact, began to see rental rises before the end of 2009.

“It is,” said Steward, “often said that SA commercial rentals track those in the world’s major cities and this is by and large true. However, when a big group like Redefine can report that is has seen office rentals decline by only 12% and when it can announce that it is confident that this year its vacancies will be halved, it becomes apparent that we have a great deal to be grateful for and a great many reasons for optimism. Now, as I see it, would be an excellent time to invest in commercial space and the Knight Frank wealth report indicates that some 20% of their clientele will in fact be looking for opportunities to do this in the year ahead.”

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