The latest Knight Frank Global Cities Report 2015 has ranked Sydney
fifth among 15 global cities in rental forecasts.
The Global Cities Report 2015 forecasts the effect of 1.1 billion new
city dwellers on the office market over the next five years across the world.
The research, which tracks prime office markets in 15 global cities (including
six in the Asia-Pacific region), forecasts that prime office rents will reach
record highs by the end of the decade as a result of the rise in urban living.
The Knight Frank Global Cities Index forecasts growth of 19.9 per cent
over the next five years and predicts the index will exceed its pre-GFC peak around
Eight of the 15 global cities including five Asian cities recorded
negative growth in office rents based on data spread over five years.
Singapore and Madrid, which were at the bottom of the list between 2009
and 2013, showed the most rental volatility and estimates for 2014 are
reflecting strong growth (9.8 per cent and 16.3 per cent, respectively).
Sydney dropped one place to fifth position (second for Asia-Pacific) in the
rental forecast period (2015–2019), while Madrid rose to second place in the
rental forecasts behind San Francisco, which ‘topped the chart throughout the
James Roberts, head of commercial research at Knight Frank, connects premium
pricing for real estate in cities to the presence of high-value knowledge
workers. These are the ‘Global Cities’ and they are rarely ignored by a
property investor or developer due to their size.
Knight Frank also predicts that vacancy rates will diminish in all of
the top 10 cities globally by 2019, with the average vacancy rate at 6.3 per
cent, down from 7.8 per cent in 2014, due to restricted supply of new office
stock and heightened demand for commercial space.
Tokyo and London will see vacancy rates drop to just 3.9 per cent and
4.4 per cent, respectively, in 2019, placing them lowest among the 15 global
Matt Whitby, head of research and consulting at
Knight Frank Australia adds that technology and IT will be driving the uptake
of office space in Australia, as they have done globally.