According to latest Savills Live/Work Index, London is the world’s most expensive cities for companies to accommodate employees with Hong Kong and New York finishing right behind the English capital. Savills’ 12 Cities Report, which measures the combined cost of residential and office rental per person per year, did point out London and New York real estate costs remain less expensive than Hong Kong, Shanghai and Mumbai when other economic considerations are factored into the equation.
During the first half of this year, London’s Live/Work costs averaged USD118,425, a 20.7 percent rise since the index began in 2008. This was only a little more expensive than Hong Kong where costs have increased just 0.4 percent since 2008. New York, which was third in the index, has seen 28.4 percent jump during this time span.
The biggest increase since 2008 was seen in San Francisco where there has been growth of 59.8 percent. Mumbai is the cheapest city on the Live/Work Index. It costs a total of USD29,088 to accommodate an employee there while Shanghai has jumped 15.6 percent and the average cost is USD38,089.
Accommodation costs are only part of the process when evaluating real estate affordability, according to Savills who compared these per head accommodation costs to the per capita GDP of each world city in the index to create its value indicator. Under this equation, Sydney and Los Angeles were the best value for live/work with San Francisco trailing behind them.
The most expensive place to live relative to city productivity was Mumbai which has a five times per head GDP, a total which Savills noted as being very high. Part of the reason for this is the fact that most workers there do not live and work in the international-standard accommodations that Savills uses in its value equation.
San Francisco has seen total accommodation costs for both financial and creative/digital businesses rise nearly 60 percent since 2008. There have also been rapid rent rises in New York and Los Angeles as the US economic recovery continues. Cities where English the first language have generally seen the highest rental growth, with London and Sydney completing the top five behind the three American hot spots.
