With a 9 per cent spike in rentals in second quarter (Q2) 2019, Bengaluru’s Central Business District (CBD) became the fastest growing prime office space in the country, and the fifth across the Asia-Pacific region.
Bengaluru CBD saw the highest annual growth in rental values in India, with current rentals at Rs 125 per sq. ft per month, according to a survey conducted by Knight Frank.
The report said Bandra Kurla Complex (BKC) and Connaught Palace (CP), which make up the prime office markets in Mumbai and the National Capital Region (NCR), respectively, were ranked eighth and 12th at the end of Q2 of 2019.
The Knight Frank Prime Office Rental Index tracks rental levels of 20 front line cities across the Asia-Pacific region.
Mumbai’s BKC registered a growth of 5 per cent in the quarter and was recorded at Rs 300 per sq. ft a month. New Delhi’s CP recorded a rental value of Rs 330 sq. ft a month also recorded an annual rise of 1.4 per cent during the quarter.
Cities like Melbourne saw the highest rental growth year-on-year (YoY) at 16 per cent, while Tokyo (12 per cent), Bangkok (10.4 per cent), and Singapore (10.3 per cent) were the other prime office markets that saw higher YoY rental growth rates ahead of Bengaluru.
Indian office rents remained stable in Q2 as the market saw an influx of new supply in the first half (H1) of 2019, with 23 million sq. ft being added during the period.
“The office markets of India have withstood headwinds from global and national economic conditions and depict an impressive growth story. The leasing volumes have grown consistently and are at historic highs, which indicates a high level of confidence that the corporate world has in the India story, especially from a long-term perspective,” Knight Frank India Chairman and Managing Director Shishir Baijal said.
He further said the IT/ITeS sectors continue to absorb the lion’s share of new space coming online, accounting for 35 per cent of all transacted volumes in H1 2019, but has started to show signs of slowing on lower corporate spending and moves towards in sourcing.
“However, this weakness has been offset by strong demand from co-working operators; co-working transaction volumes rose 42 per cent YoY to 4 million sq. ft in H1 2019,” Baijal added.
He also added that a strong rental trend will be a force majeure for growth of investments in this segment.