Knight Frank launches Global Cities Report 2015

Knight Frank launches Global Cities Report 2015Sydney ranks fifth among 15 global cities in rental forecasts, says the Knight Frank Global Cities Report 2015, which forecasts the effect of 1.1 billion new city dwellers on the office market over the next five years.According to the research, which tracks prime office markets in 15 global cities (including six in the Asia-Pacific region), prime office rents are expected to reach record highs by the end of the decade as a result of the rise in urban living.The Knight Frank Global Cities Index forecasts growth of 19.9 per cent over the next five years and predicts the index will exceed its pre-GFC peak around mid-2015.Knight Frank reported that, over five years’ worth of data, eight of the 15 global cities recorded negative growth in office rents, including five Asian cities.Singapore and Madrid, which were at the bottom of the list between 2009 and 2013, showed the most rental volatility and estimates for 2014 are reflecting strong growth (9.8 per cent and 16.3 per cent, respectively).In the rental forecast period (2015-2019), Sydney dropped one place to fifth position (second for Asia-Pacific) and Madrid rose to second place in the rental forecasts behind San Francisco, which “topped the chart throughout the decade”. “Premium pricing for real estate is found in the cities with the most high-value knowledge workers, which consequently attract the world’s leading corporations. These are the ‘Global Cities’ and they are impossible for a property investor or developer to ignore due to their size,” said James Roberts, head of commercial research at Knight Frank.With restricted supply of new office stock and heightened demand for commercial space, Knight Frank predicts vacancy rates will diminish in all of the top 10 cities globally by 2019, with the average vacancy rate at 6.3 per cent, falling from 7.8 per cent in 2014.Tokyo and London will see vacancy rates drop to just 3.9 per cent and 4.4 per cent, respectively, in 2019, placing them lowest among the 15 global cities.Matt Whitby, head of research and consulting at Knight Frank Australia, said technology and IT will be driving the take-up of office space in Australia.”Globally, these sectors have dominated the deal flow over the past year,” he said.