Mumbai: Bengaluru’s central business district (CBD) recorded the highest office rental growth in the second quarter of this year, surpassing New Delhi’s Connaught Place (CP) and Mumbai’s Bandra Kurla Complex (BKC), property consultant Knight Frank said in a report.
According to Knight Frank’s Asia-Pacific Prime Office Rental Index for Q2 2017, Bengaluru has registered the highest rental growth of 4% on a sequential basis among key business districts in India, due to sustained interest from the information technology (IT) and IT-enabled services sector. On a year-on-year basis, it grew by 7.1%.
The rent appreciation was also the third highest globally after Phnom Penh’s City Centre (4.2%) and Tokyo’s Central 5 Wards (4.1%), the report said.
Key business districts of Mumbai and New Delhi have also been listed among the top six in the index of 20 Asia Pacific cities.
Overall, rental values of prime office spaces across 20 international markets in Asia Pacific region rose by 1.2% in the quarter ending June 2017.
While Connaught Place in Delhi saw rental growth of 2.2% due to a lull in supply of new office spaces and dwindling vacancies, Mumbai’s BKC recorded a quarter-on-quarter increase of 2% in rents in the June quarter. Vacancy levels in the financial capital, however, got a boost with a fresh office supply of about 530,000 sq. ft in the last quarter, it said.
“Prime business districts in the three Indian metros have seen robust rental growth courtesy strong demand and limited vacancies. This scenario is expected to remain for a year owing to a supply crunch of new office space," said Samantak Das, chief economist and national director-research, Knight Frank India.
Despite the global pressures on the IT/ITes sector triggered by automation and limitation in demand for business the technology-driven Bengaluru market has performed well and it is expected to do even better. But prime office assets in Mumbai and Delhi are likely to see a slower growth trajectory, having already scaled high rental values, he said.