Property prices: London ranked the world's most expensive city
By Anna White, Property correspondent
London is now the world’s most expensive city for companies to locate employees, overtaking the previous leader, Hong Kong, which had topped the ranking for five years.
This will fuel fears that multinational companies looking to set up home in London could be deterred by rising relocation and property costs, driven by the strong pound.
Falling residential rates and a weakening currency in Hong Kong steadied property prices while London real estate costs grew by 10.6pc in the first six months of the year - according to new research from the property group, Savills.
This makes London the most expensive world city in which to accommodate staff, at US$121,000 per employee per year, or £73,800.
The index measures the total costs per employee of renting, living and working in 12 world cities. It takes into account office costs, taxes and fluctuating exchange rates.
Despite its climb in the rankings – from 5th to 1st place since 2008 - London is still shy of the accommodation costs record, set by Hong Kong in 2011 at US$128,000 a year.
New York and Paris are among the four leading cities, where the combined costs of renting residential and office space top US$100,000 per employee per year.
“London is not substantially ahead of its nearest rival - Paris - and therefore this is a symptom of success rather than a problem for London's competitiveness,” says Yolande Barnes, director at Savills.
“The lower level of price growth [this year] means that currency fluctuations have produced some of the biggest changes in our rankings. For multinationals looking at their local costs, it is this which is likely to exercise them more than property markets over the next year.”
She continued to say that for investors into London, the increase in rental yields showed the sustainability of house prices.
However, the average house price in London has now hit £500,000, stretching the city's affordability for workers.
Only yesterday the sale of 18 super-prime apartments by British Land broke the record for the most expensive flats ever sold in Mayfair, at an average of £11.6m each - £210m collectively.