London has regained its title as the most expensive office market in the world.

The city passed Hong Kong to take the top spot for the first time since 2008, according to a recent report by Cushman & Wakefield.

“As a truly global city, London’s appeal continues unabated,” says Digby Flower, Cushman & Wakefield’s head of London markets. “In conjunction with
a scarcity of good quality stock, prime rents have increased over the year … and we expect rents to grow further as we get into recovery mode.”

Hong Kong dropped down to second place, while Rio de Janeiro climbed from 8th to 3rd place as a result of a 43 per cent rental increase from 2011.

Globally, the office market witnessed prime rents rise by three per cent in 2012, but this was largely driven by the impressive levels of growth in South America, particularly Brazil and Colombia. Many markets actually suffered under continuing economic uncertainty and this led to increased occupier caution.

Cushman & Wakefield expects companies will continue to reduce office occupancy costs as the overall global economic outlook remains unsure.