Brexit shakes up the office accommodation stakes

The Savills Blog

Brexit Shakes Up the Office Accommodation Stakes

New York is now the world’s most expensive city in which to accommodate staff, as London drops back after two-and-a-half years holding the top spot. 

The Savills Live-Work Index, which compares total housing and office rental costs on a per capita basis in leading world cities, has found London is cheaper following the Brexit referendum. 

Currency falls have reduced London occupancy costs in US dollar terms by -11 percent since the beginning of 2016.

Meanwhile, rents for both residential and office properties in New York rose by two percent over the same period. The Big Apple now ranks well ahead of Hong Kong and London and is almost twice the price of nearest US rival, San Francisco. 

What is the annual cost?

Savills estimates the total annual cost of living and working accommodation in New York is now US$114,010 per employee. Hong Kong is $100,984 and London has dropped back to $100,141. Sydney comes in ninth at $50,768.

“Office-based businesses operating in major world cities will spend around one-third of their total operating costs on accommodation,” says Savills director of world research, Yolande Barnes.

Barnes says these costs include commercial rents, paid directly to landlords, and demands on salaries created by the cost of employees’ living accommodation.

“Fluctuations in these costs will therefore have a significant bearing on how competitive a city is to employers.”

World currency swings

The swings in world currencies since Brexit have influenced an already dynamic range of market movements across cities. 

In Tokyo, rent rises, particularly in prime residential and creative office sectors, were amplified by significant strengthening in the Yen.

In Rio de Janeiro, challenging economic conditions have damaged real estate occupier demand and rent levels. However, strength in the Real means that overall live-work costs have fallen by five percent in local currency but increased by 14 percent in dollar terms.

European cities have shown mostly modest rental growth in local currencies, but the strengthening of the Euro since December has made them slightly more expensive in dollar terms. 

To learn more about global changes since Brexit, view our detailed news article.

The above article has been extracted from the Property Council of Australia.

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