Mumbai: Despite a slowdown in economic growth, three Indian metro’s led by Bengaluru were among the select global cities that saw sharp appreciation in office rentals driven by banking, financial services, insurance and consultancy sectors.
According to Knight Frank Asia-Pacific Prime Office Rental Index that compares rent hikes at prime office markets across 20 global cities between the first quarter of 2016 and this year, Delhi, Mumbai and Bengaluru saw healthy surge in office rentals on a year on year basis. While Bengaluru recorded 4.7 per cent, established central business districts such as Connaught Place in Delhi and Bandra Kurla Complex in Mumbai saw robust rental growth of 4.3 per cent and 3.4 per cent respectively overcoming the initial jitters caused by demonetisation.
The rise in rents was remarkable considering that the three cities collectively saw close to 2.4 million sqm of new office space added since the quarter ended March 2016.
“There are disruptions in IT-driven office markets owing to geopolitical changes, automation and industry dynamics. But prime office markets in India appear as bright spots courtesy the inward-looking orientation of the industries driving them. Unlike IT-driven office markets which are linked to global fortunes, the prime office markets in India are driven by the banking, financial services and insurance (BFSI), manufacturing and consulting sectors,” said Samantak Das, chief economist & national director, research, Knight Frank India.
As the impact of demonetisation gradually subsidises, the property consultant believes that a sharp recovery in domestic consumption and fiscal reforms would improve business confidence thereby creating more demand for quality office spaces in leading cities in India.
Over the next twelve-months, Knight Frank expects rents in 15 out of the 20 tracked cities to either remain steady or increase as a moderate rise in commodity prices and improving market sentiment bode well for several Asia-Pacific prime office markets.
