The world’s top office markets all posted strong rental growth during 2005, based on an analysis by real estate services firm CB Richard Ellis. Hong Kong and London — two of the priciest office markets in the world — saw the strongest rental growth last year while vacancy in both markets declined.

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“Global investment activity has been strong during the past few years, but rising rents and falling vacancies indicate that the fundamentals are catching up,” says CB Richard Ellis researcher Steven Dunn. “As we start the New Year, strong demand for office space, modest construction activity and continued capital flow should fuel continued growth in the investment market.”

Asking rents in Hong Kong increased 45% between year-end 2004 and 2005 to close the year at $58.81 per sq. ft. Vacancy, meanwhile, dropped by 2.1% to hit 4.8% at the end of last year. On the other side of the world in London, asking rents increased by 6.7% during that period to reach $141.72 per sq. ft. at the end of 2005. That easily makes London the world’s most expensive office market, far outstripping Manhattan where the average asking rent for a sq. ft. of office space was running at $44.85 at the end of 2005.

Out of the 10 largest and most active office markets in the world, CB Richard Ellis reports that Hong Kong posted the lowest vacancy at year-end 2005 at 4.8%. Los Angeles came in with the highest vacancy of the group, with roughly 13.1% vacancy at year-end 2005. The cheapest market to lease office space was Toronto, where the average asking price for a sq. ft. of office space was only $25.44 at the end of last year.