Even as the Indian real estate sector continues to witness a slowdown, cities like Bengaluru and Mumbai are expected to attract healthy office rentals in 2020, mainly backed by rapid expansion of IT industry, a report has said.
According to a study titled 'Asia-Pacific Prime Office Rental Index Q3 2019' by property consultant Knight Frank, the National Capital Region (NCR) would see stable growth in rentals.
"India's main office markets continue to enjoy healthy rental growth, despite the weaker economic print in 2019, mainly due to the rapid expansion witnessed in its IT industry," Knight Frank India Chairman and Managing Director Shishir Baijal said.
The IT industry accounted for 35 per cent of total transaction volume in first half of 2019 across the top eight cities, which was most apparent within Bengaluru, which recorded an 14 per cent rental rise in January-June (H1) 2019.
"Multinationals continued to expand robustly because of availability of right talent pool and new office assets at comparatively low rents. In 2020, while more supply is expected over the horizon, demand is expected to remain steady as the IT sector continues to expand," he added.
According to the report, Grade-A office rents across the Asia-Pacific region are expected to fall up to 3 per cent in 2020, as compared with a 0.6 per cent rise in the first nine months of 2019, as occupier demand continues to soften.
The central business district (CBD) of Bengaluru was the best performing market in Asia Pacific in July-September (Q3) 2019 with a rental growth of 17.6 per cent, the report said.
The CBDs of Connaught Place in NCR and Bandra Kurla Complex in Mumbai were the 7th 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, respectively, in Q3 2019, it said.