London ranks number one in world for office refurbs

London offers developers the best financial returns in the world on major office refurbishment schemes, according to research published today by Arcadis.

The Arcadis report ranks 13 global cities by expected net rental income return that can be generated from refurbishing office stock that is at least 20-30 years old.

London came out on top, as developers can expect to make nearly 10% returns on their capital expenditure on major refurbishment work in the city.

Four European cities followed - Warsaw (7.5%), Milan (6%), Frankfurt (5.8%) and Amsterdam (5.5%).

Matthew Cutts, global financial institutions sector lead at Arcadis, said: “These European cities all have large volumes of old office buildings that offer enormous potential to be extended or redesigned to increase their returns for investors.

“In London, there has been a growing trend for older offices with character and in good locations to be refurbished.”

When the cities were ranked in terms of financial returns on minor refurbishment works, London came second, with an expected return of 8.5%, below leader Madrid at 9.6%.

Shanghai (7.9%), Singapore (7.53%) and Warsaw (7.47%) rounded out the top five places.

The least attractive market for office refurbishment was found to be Dubai, due to the large supply of new quality commercial office space.

Arcadis classed a major refurb as one that extends the life of an office by 15-20 years, while a minor refurb was classed as a job that extended the life of an office by up to 5 years.