With rents running to €2,344/sqm annually, London is the most expensive office market in the world, followed by Hong Kong (€1,636/sqm/annually) and New York (€1,162/sqm/annually), according to a new Cushman & Wakefield report. Prague came in at 45 on the list.
While rents were up by 7 percent on average globally in 2014, many European office markets reported a drop. In Prague, rents fell for the second consecutive year, according to Cushman & Wakefield, due to extensive development. “A similar situation can be seen in Warsaw, where the market is even more saturated than here,” says Radka Novak, head of the office agency at Cushman & Wakefield Prague. On the other hand, rents in London’s West End increased by almost 5 percent over the past year. However, they are still 13 percent less than in 2007.
Supply is really limited, which means further growth is expected. In Prague, vacancy is on the rise and rent prices in the city center are the lowest they’ve been since 2006, when they fell to €20/sqm/month. Headline rents at prime locations currently stand at €19.50/sqm/month, down from €23 in 2008 and €21 between 2009 and 2012. Novak foresees a further drop in nominal rents this year, with pressure coming from secondary buildings returning to the market and offering reasonable space at highly attractive prices.
