Beirut has the 24th most expensive office space in the world

By T.K. Maloy

BEIRUT: The capital city of Lebanon is one of the most expensive metropolises for working-space rental; with a recent rating placing it as the 24th most costly in 2013 for office rental worldwide.

Ratings were tabulated based on rent calculated by the end of last year.

According to a recent survey by Cushman & Wakefield, office occupancy in Beirut was less expensive than Ho Chi Minh City, Amsterdam, Abu Dhabi, and Istanbul – to name several cities – but was more expensive than Taipei, Jakarta, Tel Aviv and Caracas.

The global property consulting firm reported that the cost of office space in Beirut’s central business district was $640 per square meter per year in 2012, higher than the global average of $510 per sqm; and the MENA average of $475 per sqm.
For 2011, the cost of office space in Beirut was $650 per square meter per year, and $563 per square meter per year in 2010.

Nassib Ghobril, chief economist of Byblos Bank, who released news of the report in “Lebanon This Week,” the bank’s regular economic publication, said “The main reason that office rental prices were basically unchanged last year is because of the short supply of quality office space in Beirut, rather than because of a sudden increase in demand by domestic or foreign companies.”

The Byblos economist added that, “The economic stagnation of the past two years has prevented an increase in rents, but market inefficiencies have prevented a decline in the rental rates of this particular segment, which does not apply to the other segments of the office market.”

Also, Cushman & Wakefield reported that the rent for net internal office areas in Beirut was $555 per square meter in 2012, representing a decrease of 1.5 percent from $564 per sqm in 2011.

The report noted – as many analysts have – that regional instability caused a number of businesses to either postpone their location decisions regarding the Middle East, or to renew their local leases annually rather than for longer terms.

“The Middle East and Africa suffered from more dampened activity levels on the back of occupier (renter) caution fuelled by increased regional uncertainty as well as frequently by corporate cost reduction strategies,” the report stated. “As a result, the prevalence of lease renegotiations and relocations picked up throughout the year, which consequently saw prime rents come under increasing downwards pressure.”

London’s West End has taken front runner status for most expensive office space from previous top expensive renter Hong Kong. Cushman reported that the West End ranked as the most costly office district in the world, with occupancy costs up by .6 per cent to $2,820 per square meter per year.

Following London as the most expensive for office space was Hong Kong, Rio, New Delhi, Tokyo, Moscow, Beijing and New York.

The report surveyed 137 locations in 63 countries, ranking each location based on occupancy costs in a year, which includes a calculation of rent, plus local taxes and service charges.