>Bucharest, 37th Most Expensive Office Location In The World

Cushman & Wakefield put Bucharest on the 37th place on a list of the most expensive office locations in the world, while London lost the title of the most expensive office location in the world after nine consecutive years. The Cushman & Wakefield report indicates that Hong Kong and Tokyo are now the most expensive places to rent an office, outranking London, which is now third in the world.

Florin Sorea, head of the Office Department of Cushman & Wakefield Romania believes that rent for office space in the central and ultra-central areas of Bucharest were set in 2008 at more or less the same level as in 2007, the average being 21 EUR/sqm/month. The overall cost for office space in Bucharest is 367 EUR/sqm/year or 30.58 EUR/sqm/month. The overall cost includes services and parking spaces, which account for roughly 30% of the rent per square meter.

Costel Florea, head of the Investment Department of Cushman & Wakefield Romania said: "As rents are decreasing, investors are less interested in office space because there is a risk of a revenue decrease between the moment of purchase and the moment of sale to another investor. In order to mitigate such risk, investors will make offers based on higher capitalization ratios. Properties that are rented for less than the market average for that area will be more attractive." He believes that investors are no longer interested to buy when the market is decreasing. Considering the current circumstances, rents could decrease to 18-20 EUR/sqm/month for premium office space.

As most companies, both local and multinational, are facing a notable decrease in turnover, cost cuts will soon follow, so the rent budget will be affected. Cushman & Wakefield Romania estimates that these factors, along with increasing availability of office space, will lead to a 10-12% decrease in rent by the end of the year. On the other hand, the cost efficiency trend will lead to more substantial demand in the second half of the year from the banking, IT and telecom sectors.