New Delhi: Rents for offices in the main business hubs of Delhi and Mumbai will likely remain stable and not increase for the next few quarters, say property consultants.
“New supply in the suburbs and peripheral areas such as Bandra Kurla, Andheri in Mumbai and Gurgaon and Noida in Delhi-NCR will put a check on office market rentals in the central (business) region,” said Anshuman Magazine, chairman and managing director, CB Richard Ellis (CBRE) South Asia, a property consultant. “This will make the (office) rental market more stable.”
In CB Richards Ellis’ latest report on global office rents, Delhi is ranked the 11th most expensive city in the world, moving down a notch from November. The main reason for this, Magazine said, was the higher appreciation in rents in other cities, especially in Brazil. London (West End) retained its status as the world’s most expensive office market.
CBRE also said office occupancy costs measured in US dollars are affected by changes in the greenback’s value against respective local currencies. Hence, office occupancy costs when converted into US dollars are driven by both local market dynamics of supply and demand, as well as currency changes.
“In case of Indian cities, the rupee has strengthened in comparison to (the) dollar over the past one year, and countries like Brazil has moved up due to higher rental appreciation,” said Magazine.
Mumbai, which in CBRE’s previous report, had slipped one spot to seventh, has moved up to fourth now. “Office space offtake in Mumbai is dominated by companies in the BFSI (banking, financial services and insurance) and telecom domain,” said Prakrut Mehta, national director, office and industrial agency, Knight Frank India, a property consultancy.
“In the recent past, several of these companies have taken space on rent in the central business district of Mumbai. This has firmed up the rental rates. However, in (the) case of Delhi, government offices and retailers buoy the central area,” Mehta said. “For the next two quarters, office rentals will remain stable.”