DTZ, an international property group, said the capital occupied the top two spots for the price of office space, with London's West End followed by the financial district, the City.

Steep rises elsewhere in the UK made Edinburgh and Birmingham more expensive than New York or Hong Kong.

DTZ said that despite falling occupancy across the world, office space was still becoming an increasingly expensive commodity.

Costly floor space

The property firm looked at rental values in 44 countries during 2002 to compile its 'Top 10' of most expensive locations.

Office costs £/sq.ft

London West End £91 London City £73 Tokyo £57 Paris £50 Edinburgh £41 Birmingham £40 New York City £39 Moscow £38 Hong Kong £36 Manchester £36

It suggested the average office in the West End of London would cost a business £91 ($145) per square foot per month, and £73 in the City.

In third place was Tokyo, although with a substantially cheaper average price tag of £57 per square foot.

DTZ said the US had seen a "market decline in occupancy costs" during 2002, largely because of the falling value of the dollar.

Only New York made it into the list of 10 most expensive office areas, in seventh place.

Falling trend?

However, DTZ suggested that a number of property costs had fallen during 2002 as business strength weakened globally.

Average office costs fell by 3% in Western Europe, by 6% in North America and by 1% in Asia-Pacific.

The company's survey came as property group Hammerson announced it had entered into a joint venture with Axa to redevelop key properties in Paris.

The scheme will involve the creation of 26,000 square metres of prime new office space on Place Vendome, a listed facade.

Paris came in fourth on DTZ's survey, with an average cost per square foot of £50.