The cost of locating 100 staff in London is 25 per cent lower than New York, according to Knight Frank’s 2018 Global Cities report. For the first time, Knight Frank has compared the total cost of employing 100 people in the world’s leading cities, based on the cost of workspace and average salaries.
Knight Frank estimates that employing 100 staff in conventional office space in London costs $5,228,140 per year, significantly less than rival financial centres New York ($6,938,000) and Hong Kong ($5,964,990).
Despite being one of the world’s pre-eminent business locations, London is ranked only sixth on the list overall.
The list is topped by Zurich where high salary costs in the banking and asset management sectors mean companies would pay $7,947,260 to locate 100 staff in the city, per year. Zurich is followed by New York, and then San Francisco ($6,696,700), where the cost of employing a highly-skilled tech workforce drives up total occupancy costs.
The top five is completed by Hong Kong, where office rents are the highest in the world, and Boston ($5,936,820).
While London offers a considerable discount to other global cities, it remains one of Europe’s most expensive business locations. Companies locating 100 staff in Paris would accrue an annual cost of ($4,115,120), slightly ahead of Dublin ($4,051,670), while equivalent costs for Stockholm, Frankfurt and Amsterdam would be less than $4 million per year. Warsaw, meanwhile, is emerging as an attractive European business location offering a well-educated, multi-lingual labour force at relatively low cost ($1,631,670).
Lee Elliott, Head of Commercial Research at Knight Frank said: “Access to high-skilled talent is a well-established determinant of corporate real estate and location decision making. But in a low-growth economic environment where margin protection and cost control is paramount, the cost of both employing and accommodating this talent is becoming important too.
“London is one of the top three business locations in the world, yet it ranks only sixth on the list of costs. This provides a clear incentive for global companies to choose London, particularly those in the tech and financial services sector which need to attract and retain the best people, in state of the art workspace.
“Rival European cities do offer lower employment and property costs, but many global companies will see this as a false economy. As it stands, other European cities cannot match London’s high-skilled human capital, and its longstanding pre-eminence as a global business centre.”