Up until now London’s commercial property has always broken records due to the significant price tag that adorns it. Of course this makes commercial property insurance quite expensive as the cost of the building and contents must be fully covered for all eventualities.
Commercial Property Insurance gurus have always known that the London’s famed West End has held the most expensive commercial office space in the world, however now in the Spring of 2012, a rival has knocked the West End off the top spot!
Hong Kong has now taken the lead, and experts in the industry believe this is due to two contributing factors.
1) The rapid growth the city of Hong Kong underwent during early 2011
2) The stabilisation of growth for the West End, where it almost ground to a halt despite increasing by a whopping 30% in 2010
Hong Kong are now able to charge a fiver more per square foot of commercial office space compared to London’s West End which has plateaued at an average of £92.50.
Despite this recent turn of events, insiders doubt Hong Kong will hold the top spot for long, as plans are made to increase office space in London, whilst commercial property regains its strength proving to be almost recession proof in our capital. Whereas international investors are demanding lower priced commercial property in Hong Kong. With the entire global economy being compromised, corporate firms are unwilling to invest in property that has reached a peak price.
Meanwhile regional commercial property is still climbing the ladder of success, as commercial property insurance experts predict a steep rise in the cost of office space, breaking recent downturn trends and putting property back on the road to recovery.
In the short term growth is expected, making it even more important that owners revalue their commercial property and amend their commercial property insurance accordingly.
The Director of Commercial Research at Savills, Mat Oakley, strongly expects that London set the standard for a more national recovery.
He is quoted as saying, “I think this year we will start to see some of the growth that we have seen in London spreading out to some of the key regional cities, without a shadow of a doubt. We expect to see rising rents in the office markets outside of London this year which we didn't really see last year. “
However he admits that the surge may be sporadic, highlighting that the richest communities and High Streets may experience a rise in investment and prices, whereas the poorer districts will continue to fall.
This is good news for those with commercial property in the desired areas, mainly the suburbs of London, however not so optimistic for those that have already suffered a huge loss due to the country’s recession.