Prime office realty rentals on the rise
MUMBAI: Demand for commercial real estate, led by sustained occupiers’ interest to expand businesses in India, is pushing prime office rentals in main cities such as Mumbai, New Delhi and Bengaluru upwards.
During the first quarter, prime office rentals in Bengaluru, Mumbai and Delhi rose 17%, 5% and 1.4%, respectively, from a year ago. The growth has made New Delhi’s Connaught Place the fourth-most expensive office market in the Asia-Pacific region, showed data from Knight Frank.
Connaught Place recorded gross effective monthly rents of $82.5 per sq metre (Rs 330 per sq ft) that stacked up just behind Hong Kong, Tokyo and Singapore. Mumbai’s Bandra-Kurla Complex (BKC), with effective monthly rents of $75.1 per sq metre (Rs 300 per sq ft), was the seventh-most expensive office location.
“The office space demand witnessed record growth in 2018 with over 47 million square feet (msf) of leasing, while new office space supply rose 13% in the same period. Prime office markets are already operating with very low vacancy, which is slowing down new transactions. Strong demand trends have put upward pressure on rentals, especially in prime markets, a trend that is expected to continue,” said Shishir Baijal, CMD of Knight Frank India.
Knight Frank’s Asia-Pacific Prime Office Rental Index for the first quarter of 2019 recorded a decline of 0.4% sequential growth in rentals, though it remained up 6.2% year-on-year basis. The sequential decline in the index was attributed to continued heightened global uncertainties led by re-escalation of US-China trade tension, Brexit and various major elections across the region.