Established business districts across key Indian metros dwarfed many matured international markets in rental growth and in terms of overall gross effective rents, according to the Knight Frank Asia-Pacific Prime Office Rental Index Q4 2017.
Commanding gross effective rentals of USD 88.8 per sq. m per month, Connaught Place in Delhi, emerged was the 3rd most expensive office district among global peers across 20 international cities on the index topped by Central, the prime office pocket in Hong Kong (USD 212 per sq. m per month). Mumbai’s bandra Kurla Complex (BKC), the 5th most costly office conclave on the list with gross effective rentals of USD 80.1 sq. m per month, improved its position by two placed over Q4 2016.
In terms of rental appreciation, Bengaluru’s Central Business District (CBD) recorded the 3rd highest growth with YoY increase of 5.40% in the 12 months to Q4 2017. While Connaught Place (5%) ranked 5th by this measure, BKC (4%) stood at the 10th position.
Projections for the subsequent 12-month period indicate rental growth in BKC and the Bengaluru but it is expected to plateau at Connaught Place.
Overall the index recorded 1.1% YoY growth in the last quarter of 2017 propelled by solid economic performances across the Asia Pacific region. This was primarily driven by rising rents in 12 of the markets over the quarter.
Further rentals across at least 16 out of the 20 markets tracked are either set to appreciate or stay stable, the report added. Demand in co-working and technology-related spaces are expected a play a major part in pushing rents up.
Speaking on the report findings, Dr. Samantak Das, Chief Economist and National Director-Research, Knight Frank India, said “Rental growth continues to be strong across prime office markets in India on account of an ongoing supply crunch in the country. This, coupled with strong occupier demand is expected to drive the rentals up in the next 12 months in the prime office markets of Mumbai and Bengaluru; however, we expect rental growth to remain stable in Connaught Place.”