Mumbai top investment destination for office properties

Central Mumbai has emerged as top investment destination for office properties with 19% annual return as prices are expected to rise 63% over five years, global realty consultant Knight Frank said today.

The rental values of office space in the central Mumbai are estimated to rise by 47% by 2017, according to its report 'India's Top Business Districts To Invest In'.

"At 19% per annum, Mumbai's central business district will yield the best investment return in the country," Knight Frank India Chief Economist and Director (Research and Advisory Services) Samantak Das said told reporters here.

While the capital values of office properties in central Mumbai are expected to increase at Rs 27,400-37,200 per sq ft in 2017 against Rs 16,800-22,800 per sq ft last year, the monthly rentals are expected to increase to Rs 206-279 per sq ft from Rs 140-190 per sq ft during the period under review.

"Central Mumbai and suburban business district (SBD)-west grab the top two spots in the overall list," the report said.

Mumbai's (SBD-West) will give a return of 15%.

Availability of talent, conducive business environment, international air connectivity, presence of prominent stock and commodity exchanges along with headquarters of several banks form the backbone of the financial industry in Mumbai, the consultant noted.

India's financial capital's office space has seen highest occupancy of 26% from the banking, financial services and insurance (BFSI) sector, followed by IT/ITeS segment with 25% demand.

Hyderabad (SBD), Mumbai (BKC & off BKC) and Pune (SBD East) are at third position in terms of investors return at 14% per annum.

The business districts of the National Capital Region (NCR) and Bengaluru, despite being the largest office markets in the country, will lag behind other cities in terms of investor return, Das said.

The office properties in Delhi-NCR would give an annual return in the range of 8-11% to investors.

"While IT dominates Bengaluru and BFSI remains significant for Mumbai, NCR has a more diversified demand for office space. Also, more and more corporates are evaluating NCR due to better infrastructure and availability of manpower," Knight Frank India Director (Occupier Solutions Group) Viral Desai said.