London has overtaken Hong Kong to take the title of world's priciest office market, followed by a surprise, fast-rising third place Rio de Janeiro, according to a new survey.
Relatively scarce quality space in London has fuelled competition and driven up office rents, particularly in the West End, said the report from Cushman & Wakefield, the world's largest private real estate services firm.
"As a truly global city, London's appeal continues unabated. In conjunction with a scarcity of good quality stock, prime rents have increased over the year," said Digby Flower, head of London Markets.
"Equally importantly, we expect rents to grow further as we get into recovery mode."
Hong Kong's CBD (central business district) slipped to second place, while the Zona Sul area of Rio de Janeiro leapt from 8th place to third on the back of a jaw-dropping 43% rental increase from 2011, it said.
"Safe havens or gateway cities such as London, Hong Kong and New York continue to command high rents despite uncertain economic conditions, as they remain key markets in which to do business," said Glenn Rufrano, President and CEO of Cushman & Wakefield.
"Burgeoning population growth has led to rising occupancy costs in emerging markets in South America and Asia," he added.
The Americas region saw the highest rental growth over the year as prime rents moved up by 10 percent. That comes as growth rates in many Latin American countries are outstripping those in other developing nations.
South American economic powerhouse Brazil is gearing up to host the 2014 World Cup and the 2016 Summer Olympics in Rio.