Budapest ranks 20th among the most popular office locations

Many cities in emerging markets are attracting a similar number of international office occupiers as established business centres, according to a forthcoming study by CB Richard Ellis (CBRE).

According to Business Footprints, which compares the office presence of 280 major companies across 101 countries and 232 cities, 17 of the top 30 most popular company office locations are in emerging markets. At a time of ongoing global economic flux, this finding reinforces the significance of the “BRIC” (Brazil, Russia, India, China) and less developed emerging markets to international business operations.

CBRE’s research identified Shanghai and Moscow as the most popular business locations across all emerging markets. Shanghai is home to   172 of the companies profiled (61.4%), and is closely followed by Moscow, where 170 (60.7%) are present. Beijing is the next highest ranked business centre across all emerging markets, with 169 of the 280 companies (60.4%) surveyed having an office presence in the city.
 

The high ranking of both Chinese cities is explained by two things: China’s importance as an off-shoring location and a manufacturing base (which, in turn, requires an office presence), and its growing status as a consumer market for both locally manufactured and foreign-made goods.

Other cities in the rapidly expanding “BRIC” markets which rank among the world’s top 30 business locations include Sao Paulo (52.1% of companies surveyed have an office in the city), and Mumbai (43.2%).

The report also indicates a number of cities in less developed emerging markets are home to a significant proportion of international companies. Dubai is ranked as the 9th most popular business location overall and Warsaw is 12th, reflecting the fact that both have developed into strategic business hubs in their region. While Warsaw is an important business hub in Europe, the additional presence of Budapest (20th), Prague (21st), and Bucharest (29th) in the report’s top 30 list highlights the rising importance of many Central and Eastern European markets for international businesses in Europe.

Richard Holberton, Director of EMEA Research at CBRE, said: “Our finding that over half of the world’s most popular office locations are outside of the most economically developed nations underlines the importance major companies are placing on gaining access to new markets to fuel their growth. “It is particularly interesting to note the position of a number of emerging markets relative to established cities in developed economies. For example, Shanghai, Moscow, Beijing and Dubai feature in the top 10 most popular business locations, with more international companies present than in Paris (56%), New York (55%) and Milan (53%). “In addition, one would not necessarily expect that second-tier emerging markets like Bangkok (48.9%) and Istanbul (41.1%) would have a comparable presence of major office occupiers to places like Sydney (48.6%) and Frankfurt (38.2%).

CBRE’s survey showed that after Warsaw, Budapest is the second most important destination for global companies in the CEE region. In addition, the capital ranked 20th among all examined cities and 10th among emerging cities. The Hungarian Central Statistical Office recorded more than 20,000 foreign owned companies in Budapest in 2009. Each year more than 60 new foreign companies settle down in the country on average, 70% of them in the capital.

Methodology

Company sample: The Fortune Global 500 list was used to identify the 300 largest firms (based on revenue) for inclusion in the study and was also used as the basis for sector categorisation. This company list was then amended to ensure that we were capturing they key office occupiers across all sectors. For example, law firms, which are not listed on the Fortune 500, were added to our sample.

The sample is composed of the principal firms in each sector, regardless of their headquarters’ locations. This means that the sample is not composed of equal number from each region – the split is roughly 45:35:20 EMEA: AMERICAS: ASIA PACIFIC.
 

City sample: The two cities with the largest population in each country in our sample were automatically included in the city sample. Any additional cities with a population of more than five million that were not the first or second city in a country were also included. This increased the number of cities in China, the United States and India in particular.

 
Measuring Office Presence

Throughout this report we refer to companies being ‘present’ in a market, but what do we mean by this? For the purposes of this study we have taken it to mean that companies have a physical office presence in a city.

 
If, therefore, a company is registered through a PO Box, it is excluded as it does not necessarily follow that it has an office in a particular city. The exceptions to this rule are the UAE and South Africa, where it is the norm for companies to provide a PO Box rather than a physical address. In fact, in most cases there are ways to double-check that office existed in these markets.