Hong Kong continued to hold the top spot for occupancy costs, in both the Asia-Pacific region and the world, property consultant Colliers International say. Gross office rent in Hong Kong, which also ranked top in 2008, was US$161.14 per square foot per year last year and an increase was expected this year. It was followed by London's West End with rents of US$139.43 per square foot per year. It ranked fourth in 2008. Tokyo, with rents of US$101.24 per square foot per year, fell one place to third, according to Colliers' year-end report, Global Office Real Estate Review. Prime class A office rentals in Hong Kong have moved up and down over the past year. They fell 22.4 per cent from the end of 2008 to the middle of last year, and then rose 16.7 per cent to the end of the year. But rents are still 9.4 per cent lower than the US$177.86 reached at the end of 2008. 'With the incoming of new hedge funds and private equities, the demand for grade A office space picked up at a faster than expected pace during recent months,' said Simon Lo, a director of research and advisory at Colliers International Hong Kong. 'During the current recovery cycle, the central business district took the lead due to limited supply in both new and secondary stock. 'In anticipation of growing occupational demand, grade A office rentals are projected to increase 12 per cent in the next 12 months.' Market transparency and promising capital appreciation of the Hong Kong office market appealed to investors, Lo said. 'It is expected that the office prices in the central business district can see better performance than the rentals.' The report, featuring 154 office markets across the world, said most world regions remained hampered by little demand for office space with leasing activity remaining sub-par. The United States and much of Europe recorded weak tenant demand, while Latin America and much of Asia-Pacific were beginning to show the first signs of growth. All regions again reported higher vacancies and falling rents; however, the changes were modest compared with the first half of last year. Office sales activity in the second half was up in all regions, suggesting investors see a firming in market fundamentals in the near future. Following a 2?-year period of decline, office investment sales in the second half last year rose 42.3 per cent to total US$41.8 billion, compared with the first half of the year. 'This suggests that the market may have reached the bottom and global property sales are now set to go higher,' the report said. Cross-border investment in particular is still relatively quiet, with most investors focusing on domestic markets as the opportunities closer to home are preferred.