Great news, everybody! London has just over-taken Hong Kong to be ranked as the most expensive world city where you can possibly base your company. You’re welcome.
The Savills Live/Work Index, put together by the eponymous property consultancy, ranks 12 leading cities by the amount in dollars it would cost to rent both residential and office space for a single employee for a year. The intention is that it offers multinationals some insight into how much it’d cost in any given location.
Over the first half of this year, it found that costs in London has rise by 5 per cent, and now stand perilously close to $121,000.
Savills credits the recent rise to the strengthening of the pound against the dollar. But this doesn’t explain the longer term trends, which have seen costs in London rise nearly 40 per cent since 2008, when the city ranked fifth. In just six years, London has climbed four places in an otherwise remarkably stable ranking.
It gets worse.
There are two other cities where costs have climbed by more since the start of the recession. But Rio has the advantage of being in a developing country. Sydney, meanwhile, is the major city in a country with a much healthier economy than Britain’s. Both, in other words, are cities where you’d expect costs to be up in dollar terms. Both are also, incidentally, far, far cheaper than London.
Let’s count the winners and losers in this situation, shall we?
Losers: Renters, young people, businesses, first time buyers, anyone hoping to swap a small flat for a family home, anyone else dependent on the city’s long-term economic health.
Winners: Those who see property more as an asset class than as somewhere to live.
The one upside of ranking like this, of course, is that it’ll be seen by a lot of property investors. Maybe, just maybe, some of them will think London isn’t such a great place to put their money any more, and the trends will go into reverse. We can but dream.
Here’s the full index.
There are two other things worth noting about this index. One is that London in 2014 is not the most expensive city ever to feature in it. In 2011 basing a single employee in Hong Kong, which has topped the index every other year since its inception, would cost you $128,000. It remains, notes Savills, “by far the most expensive city in which to buy residential property, with prices 40 per cent higher than London – but the gap is narrowing”.
Meanwhile in Dubai, which experienced an enormous property crash during the recession, costs are still down 16 per cent on 2008. But it’s clearly in recovery now, and they’re up by more than a quarter since the star of the year. Whether that recovery is sustainable remains to be seen.
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