London has been ranked the most expensive city to live and work in, with accommodation in the United Kingdom’s capital costing more than twice as much as in Los Angeles and Sydney.
The estate agent Savills has compared the total annual cost of renting homes and office space per person, creating a list of the world’s 20 most expensive cities.
London, where it costs £80,777 per person per year, has topped the list since June 2014.
A quarter of the top 20 most expensive cities are in the United States, with New York (at a yearly cost of over £79,000) coming in just behind London.
Overall, the average cost of home and office accommodation per person per year across the top 20 cities is £40,641, with Rio de Janeiro being the most affordable.
Savills’ index is aimed at giving employers an idea of the cost of accommodating an employee in cities around the world. Head of World Research at Savills, Yolande Barnes, says: “The productivity of cities and their value to global businesses clearly has a pronounced effect on demand and hence rental costs.”
The highest-ranking cities for productivity, such as London and New York, are also the most expensive to live and work in. Barnes notes that arguably they could be achieving fair prices in relation to their global city scores. The index also highlights the development of smaller cities, such as Berlin and Dublin, which are “fast moving into the realm of world-class city status and competing with the giants in a new digital age”.
Cities must keep developing their supply of both office space and residential accommodation to keep up with demand.
Barnes adds: “World cities can become a victim of their own success when rents rise to the point where affordability becomes an issue.”
Savills wants to see an increase in supply of high-quality workspace, noting that this will be a crucial development for emerging cities such as Rio de Janeiro, Mumbai and Lagos.
These office spaces don’t need to be “international architectural-style, plate glass fronted offices”. Small-scale, informal and local buildings are appropriate for the majority of workspaces across the globe, Savills argues.
The estate agent highlights a major challenge facing global cities: “Growth without social, economic or environmental loss is perhaps one of the biggest challenges facing our world cities today.”