San Francisco has its hip entrepreneurs, Hong Kong its thriving financial centre and New York its Wall Street, but it seems that for employers London is the most desirable place to house workers. Unfortunately for them, it is also the most expensive.
A report by Savills has revealed that, for the third year, London is the most expensive city in the world to accommodate an employee, based on the costing of renting a home and leasing office space for each worker per year.
Rising rents and London’s perceived value to global business has pushed up the typical cost for an employee to live and work in the capital to $112,800 (£80,927), about $1,500 more expensive than New York and $56,000 above the average cost for a worker across 20 leading cities.
In Rio de Janeiro, it costs $16,500 to provide a home and office space, nearly $96,000 less than London. The city is double the cost of other global hubs such as Sydney, Los Angeles and Miami and 70 per cent more expensive than companies pay in San Francisco.
Yet there are a number of “upstarts” emerging on to the ranking table, such as San Francisco, Berlin and Dublin, where a growing number of people working in the technology industry are coming to live and work, fuelling a rapid rise in the cost of property. The cost of accommodating a worker in San Francisco grew by 13 per cent over 2015, the fastest growth of any city in the table.
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Yolande Barnes, head of Savills’ world research, warned that cities such as London now faced a difficult challenge in continuing to attract young businesses as it became more expensive.
“World cities can become a victim of their own success, when rents rise to the point where affordability becomes an issue,” she said. “Rapid urbanisation demands supply elasticity. The test for the top Alpha cities is to supply new business quarters and residential neighbourhoods while capturing the characteristics that made the city attractive in the first place.”
One type of social group that may not be too concerned about the rising costs of London are “ultra-high-net-worth individuals”, who tend to favour London as the best city to live, work and send their children to school, according to a separate study by Knight Frank.