Hong Kong is the world’s most expensive city to rent a home or business, followed by New York and then London, according to a global index compiled by international real estate advisor Savills.

Singapore offers businesses locating in the city the best value accommodation in relation to the size of its economy according to the Savills ‘World Cities Review’ which ranks cities according to their accommodation costs in 10 top locations.


The latest report found that costs have remained broadly stable, falling an average of just 0.05% in the first half of 2013, but having risen in old world cities and fallen in new world ones.

This has made emerging and recently emerged markets relatively more competitive again, with Sydney, Shanghai and Mumbai offering the lowest total base business costs, with Mumbai costs around a quarter of Hong Kong.

The costs of accommodating core international business units in both prime financial and secondary ‘creative’ locations along with the associated residential rental requirements of 14 households are taken into account in the ‘total costs’ measure.

New York has risen from being the fifth most expensive city at the beginning of 2010 to second by June 2013 having seen total costs rise 36% since 2009 and a total of 19% over the past five years. London has recovered strongly, totaling 17% since bottoming out in 2009 to sit in third place.

Paris is in fourth place, followed by Tokyo, Singapore, Moscow, Sydney, Shanghai and Mumbai. But when cities are ranked in terms of value for money the picture is different with Singapore offering the best value, followed by Sydney, Moscow, New York, Paris, Tokyo, London, Shanghai, Hong Kong and then Mumbai.

Savills has created a ‘value for money’ ranking, measuring accommodation costs against city GDP per head which is taken as an indicator of the income potential for businesses located there.

By this measure, Hong Kong, where total accommodation costs are almost four times those of Mumbai, actually looks three times cheaper than Mumbai, where locating an international business might be viewed with regard to market volume and labour availability rather than premium revenues. This makes real estate in the Indian city look very fully valued, particularly as some economies are slowing at the present time and rival economies are emerging as sources of low cost labour.

Singapore, where unadjusted total accommodation costs are high in a new world context, proves to be the cheapest city in relation to its GDP per head. Ranked in this way, Singapore is less than half the cost of Hong Kong and approaching five times cheaper than Mumbai.

‘Headline per square foot office rents are a misleading indication of the total real estate costs faced by relocating companies. The value of real estate is higher where more corporate revenue can be generated,’ said Yolande Barnes, Director Residential Research at Savills.

‘In other words, it is worth paying more to accommodate an executive team in Singapore with its high GDP than in the low GDP Mumbai,’ she added.