London overtakes Hong Kong as 'world’s most expensive city'

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The development of One Hyde Park in London. London has become the world's most expensive city to live and work in, according to real estate firm Savills. Photo: Reuters

Published: 3:00pm, 24 Sep 2014Updated: 7:54pm, 24 Sep 2014

Rising rent and a strong pound have made London the world’s most expensive city to live and work in, surpassing Hong Kong for the first time in five years.

According to a new report (pdf) by real estate firm Savills, real estate costs per employee in London have risen to US$121,000 a year. Hong Kong, New York and Paris are not far behind and in all cities the combined cost of renting residential and office space tops US$100,000 per employee per year.

“I don’t think it’s desirable necessarily to be the most expensive city to occupy, but on the other hand, you probably wouldn’t be the most expensive city if you weren’t also the most desirable,” Yolande Barnes, director of world research at Savills, told the Financial Times.

Barnes warned that for prospective renters, “clearly it makes London less attractive compared with other cities employers might look at.”

Property prices in the British capital have risen 18.4 per cent in the past year, Savills said. Office rents have also climbed sharply.

“The vitality of central London locations is at risk as they become too expensive for the types of occupiers that made them attractive in the first place,” the report said.

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