London’s West End is the most expensive office location in the world, according to a report published by property services firm DTZ.

West End occupancy costs rose 16% last year, to $19,330 (£10,350) a workstation a year, although the hike can partly be explained by an appreciation of the pound against a weak dollar.

The report showed that despite a weak UK occupational market over the past two years, the West End still commands the highest prices. Paris took second place, but costs were 20% less than those of the West End.

The City of London came in third, followed by Washington DC, which rose five places since last year. New York took eighth place.

DTZ’s report covered 113 prime business districts across 44 countries. At the bottom end of the table the Philippines was the cheapest office location, and all the least expensive locations fell within the Asia Pacific region.

Out of the top 10 most expensive office locations, seven were European cities, and cost an average of $9170 (£4886) a workstation a year. Western Europe had a 41% premium over North America, the next most expensive region with an average cost of $6490 (£3458).

Unlike last year, occupancy costs in Central and Eastern Europe surpassed those in Central and South America, partly because of the strengthening of the euro against the dollar.

Elspeth Lochhead, a DTZ director, said: “Occupancy costs have risen, reflecting London’s continuing popularity, despite fears that emerging office markets like India might undermine future growth.”

The report said that costs would continue to rise in 2005, with the major world financial centres of London, New York and Hong Kong unthreatened by Asia and Eastern Europe.