Office market in India continues to be robust despite sluggish economic growth with international property consultant Knight Frank in its recent report Asia Pacific Prime Office Rental Index Q3 2019 showing that central business district (CBD) of Bengaluru registering the highest year-on-year rental growth in the Asia Pacific region at 17.6 per cent in July to September quarter this year (Q3 2019).
A resurgence in IT/ITeS sector hiring since the first half of 2019 (H1 2019) and increased activity by manufacturing companies kept demand buoyant in Bengaluru CBD comprising areas like M G Road, Infantry Road and Residency Road. New and higher-priced stock coming online in the CBD along with higher rentals being charged by renovated properties also caused rentals to rise.
Bengaluru was followed by the CBDs of Melbourne and Bangkok at the second and third ranks with a year-on-year office rental growth of 15.5 per cent and 9.4 per cent respectively.
The CBDs of Connaught Place in National Capital Region (NCR) and Bandra Kurla Complex (BKC) in Mumbai were the seventh and 11th fastest-growing prime office markets in the Asia Pacific region respectively with a comparatively modest 4.4 per cent and 2 per cent year-on-year rental growth in Q3 2019.
In terms of rentals, Hong Kong with a monthly rental value of 206.6 US dollars per square metre was the most expensive office market in Asia Pacific in Q3 2019 followed by Tokyo (110.9 US dollars per square metre) and Singapore (80.5 US dollars per square metre).
The CBDs of NCR and Mumbai were ranked as the fifth and seventh most expensive prime office markets in Asia Pacific with monthly rental values of 51.8 US dollars per square metre and 46.2 US dollars per square metre respectively.
"Bengaluru CBD sees continuous demand which in turn has pushed the rental values upwards," said Shishir Baijal, Chairman and Managing Director of Knight Frank India.
"CBD in New Delhi continues to remain attractive. However, low vacancies and lack of Grade-A supply have restricted leasing volumes in this location. Mumbai CBD, on the other hand, continues to be one of the most favourable office destination commanding high rental values. We expect the trend to continue for these markets as the demand for office space is expected to continue," he said in a statement on Monday.
Knight Frank's Asia Pacific Prime Office Rental Index, which tracks office rental levels of 20 frontline cities across the Asia Pacific region, rose 0.1 per cent quarter-on-quarter to 157.3 in Q3 2019. Year-on-year, the index rose 1.8 per cent, decelerating from the 3.4 per cent rise witnessed in Q2 2019.
Of the 20 cities tracked by the index, 12 recorded either stable or increased quarterly rents, three less than the 14 reported in the previous period.
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