The finding came in a report “Office Space Across the World 2009” by international property consultants Cushman and Wakefield, which looks at prices of office spaces in 202 prime locations across 57 countries. According to the report, London slipped from its position as the world’s most expensive location for the first time in nine years and it was replaced by Hong Kong, where the annual office occupancy cost is $ 228 a sq ft. Globally, 2008 witnessed the lowest growth rate since 2004. Office rents increased by three per cent on an average across the globe as against the 14-per cent raise in 2007.

Mumbai is the only city that figures twice in the list of ten most expensive office locations, with Nariman Point at number 6 and Worli at number 10 positions.

The report states that there has been a 9 per cent drop in rental values at Nariman Point ($135 a sq ft per year) which saw a 5 per cent vacancy rate. Likewise, Worli ($118 a sq ft per year) has seen a correction of 13 per cent in rental values over the previous year and a vacancy rate of 7 per cent. With many corporates putting their expansion plans in Mumbai on the backburner and many others not renewing their expired lease agreements, the city witnessed an overall vacancy of 12 per cent in 2008, up from the 4-5 per cent vacancy in 2007.

Anurag Mathur, managing director of Cushman & Wakefield, points out that the steady depreciation in office rentals in prime areas of Mumbai and Delhi is the result of the rentals having reached very high price points. “Markets like Kolkata, Bangalore and Hyderabad never saw very high price points, thus limiting the extent of correction,” he said.