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Office Costs increase per Workstation in NZ

NEWS RELEASE

7 February2005

For immediate release

Office Accommodation Costs increase per Workstation in New Zealand with
Auckland ranking 71st Globally in 2005, rising from 78th Position in 2004

NEW ZEALAND – ACCORDING TO THE GLOBAL OFFICE OCCUPANCY COSTS SURVEY 2005, AN ANNUAL SURVEY COMPILED BY INTERNATIONAL PROPERTY ADVISERS DTZ, AUCKLAND’S COSTS ARE RISING, RANKING 71ST GLOBALLY IN TERMS OF OFFICE COSTS PER WORKSTATION.

The report by DTZ Research covers 113 major prime office locations in 44 countries worldwide, with an additional office location in Tel Aviv covered in this latest survey. The survey is intended to be a guide for the many businesses that are increasingly operating across borders and cities. The increasing number of cities being covered in this survey is a reflection of DTZ gaining presence in many markets.

The ranking for the 2005 survey is focused on total occupancy costs per workstation rather than per unit area as it better reflects the true costs of accommodation. Total occupancy costs per workstation is a better indication of costs to occupiers as they reflect the way organisations occupy and use the planned floor space, as well as, the cost of space on a unit area basis.

Generally, most markets maintain a positive outlook for 2005. Of the 113 cities, almost half (49%) expect office occupancy costs to rise in tandem with overall improved sentiments and a further 45% expect costs to stabilise.

Global Ranking

Based on the survey, London (West End) and Paris remains the top two most expensive locations globally. The remaining cities in the previous top ten list experienced minor changes in ranking. The exception is Washington D.C. which went up five places to become the fourth most expensive location. Both London (West End) and Washington D.C. posted double-digit year-on-year (YOY) increase of 16% and 25% to USD 19,330 per workstation per annum (pa) and USD 14,250 per workstation pa, respectively. Of the top ten, seven were Western European cities.

Similarly, ranking for the ten least expensive locations remained almost unchanged from last year, all of which were from the Asia-Pacific. Among the 113 cities, the Philippines is the least expensive office location with an average cost of USD1,220 per workstation pa in Makati and USD710 per workstation pa in Ortigas.

New Zealand’s ranking rose in all three centres. Mr Ian Mitchell, DTZ New Zealand’s National Research Manager, said the main reasons for the increase were the appreciation of the New Zealand dollar and an increase in rents nationwide.
Occupancy costs in Wellington experienced a marginal increase to USD4,190 per workstation pa with its regional position in Asia Pacific increasing from 15th to 19th. Auckland is still a more expensive office location than Wellington though, posting a high 13% YOY increase to USD4,860 per workstation pa. Christchurch also showed and increase ranking 14th in Asia Pacific with a 19.9% change to USD3,320 per workstation pa.

A strong rebound was most prominent in the Hong Kong market with occupancy costs surging 32% YOY to USD9,320 per workstation pa, advancing three places to become the second most expensive Asia Pacific location behind Tokyo (Central 5 Wards). Its global ranking leapt 19 places to 14th position for 2005. The Australian cities (Sydney, Brisbane and Perth) dominated three of the top ten in the region due mainly to the appreciation of the Australian dollar against the USD.

In India, demand continued to emanate from the IT/IT-enabled services and Business Process Outsourcing sectors and this trend is expected to continue into 2005. Tight supply of prime office space and a healthy level of demand is expected to increase occupancy costs in Bangkok, New Zealand and Malaysia. Rising occupancy costs are also expected in cities such as Hong Kong, Singapore, Shanghai (Pudong), Surabaya, Jakarta and Ho Chi Minh City. Notwithstanding an improved economic outlook, costs (locally quoted) in Australia, Japan, the Philippines South Korea and Taiwan are forecast to remain stable.

Regional growth and dearth in quality office space escalated costs in Riyadh and Jeddah, posting high growth rates of 18% and 15% YOY respectively. At USD5,130 per workstation pa, Riyadh surpassed Dubai to become the most expensive location in the region. High levels of supply in Dubai resulted in costs remaining flat at USD4,780 per workstation pa despite increased foreign investment. The costs of locating an office in a number of Middle East locations are higher than some major Asia Pacific cities.

Discounting currency fluctuations, increases in locally quoted total office occupancy costs per workstation were mainly from Asia Pacific locations while the European and American markets accounted for most of the reduction in costs.

Of the top five with the highest growth in costs, two were from Asia Pacific namely Hong Kong and Bangkok with YOY increases of 32% and 18% respectively. The biggest drop in costs was reflected in Philadelphia (-29%), followed by New York City (Downtown) (-15%), Frankfurt (-12%), Houston (-12%) and Rome (-11%). The American markets are likely to account for most of the increase expected in 2005 with a number of locations forecasting an upward movement in costs.

-End-

Total Occupancy Cost Rankings In US Dollars per Work Station

Ranking Location Total Occupancy Cost per Workstation (US$ per year)

2005 2004 Country City 2005 2004 % Change

Top Five

1 1 UK London (west end) $19,330 $16,680 +15.9%
2 2 France Paris $15,520 $15,700 -1.1%
3 4 UK London (City) $15,280 $13,990 +9.2%
4 9 USA Washington DC $14,250 $11,420 +24.8%
5 3 Germany Frankfurt $13,640 $14,580 -6.4%

Key Asia Pacific

29 17 Australia Sydney $7,790 $8,200 -5.0%
79 62 Australia Melbourne $4,650 $5,100 -8.8%
55 55 Australia Brisbane $5,470 $5,290 +3.4%
17 33 Hong Kong Hong Kong $8,860 $7,070 +25.3%
93 87 Singapore Singapore $3,990 $3,930 1.5%

New Zealand

70 78 New Zealand Auckland $4,880 $4,300 +13.5%
86 94 New Zealand Wellington $4,200 $3,600 +16.7%
97 99 New Zealand Christchurch $3,360 2,770 13.5%

Bottom Five

109 107 Indonesia Jakarta $2,080 $2,120 -1.9%
110 112 Thailand Bangkok $1,500 $1,260 19.0%
111 111 Indonesia Surabaya $1,380 $1,330 3.8%
112 110 Philippines Manila (Makita) $1,220 $1,360 -10.3%
113 113 Philippines Manila (Oritgas) 710 780 -9.0%

ENDS

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