For Q1 2021, Knight Frank's Asia Pacific Prime Office Rental Index fell negative 1.2% quarter-on-quarter led by large office markets like Tokyo, Hong Kong and Bengaluru
Prime office rentals across Bengaluru, NCR and Mumbai markets are expected to remain stable in rental values over the next 12 months, Knight Frank said in a report.
According to its latest report Asia Pacific Prime Office Rental Index Q1 2021, Bandra Kurla Complex (BKC) in Mumbai witnessed a meaningful recovery in office rents to negative 0.8% QoQ during the January to March quarter compared to negative 5.5% in the previous quarter. The robust recovery can be attributed to improved transaction activity.
Knight Frank forecasts the decline in rents to decelerate this year with overall rents expected to decline by 3% in the Asia Pacific region compared to 4.8% decline seen in 2020.
The central business district of Bengaluru comprising areas like MG Road, Infantry Road and Residency Road registered a decline of 3% QoQ in Q1 2021 against a decline of 4% in Q4 2020. Connaught Place in National Capital Region (NCR) office rents saw a flat price change in Q1 2021 compared to negative 1% in Q4 2020.
According to the index, Taipei is the only city expected to witness an increase in office rental values across the A-Pac region in next 12 months. Of the 22 cities tracked by the index, 8 recorded either stable or increased rents in the past quarter compared to 10 in the previous quarter.
For Q1 2021, Knight Frank's Asia Pacific Prime Office Rental Index fell negative 1.2% quarter-on-quarter led by large office markets like Tokyo, Hong Kong and Bengaluru which recorded rental decline between negative 3 to negative 2.8% during the same period. On an annual basis, the overall index was down negative 5.5% year-on-year.
Going forward, while office market conditions are expected to remain soft for most of this year, the rate of rental decline is expected to decelerate, buoyed by improving economic conditions as landlords rein in the rental incentives that were on the table last year and workers gradually re-occupy offices, the report said.