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Bengaluru shows stronger office rental projections than Mumbai and NCR: Report

Investment enquiries increased for the office sector, demand was flat in the retail portion of the market, and fell for industrial assets

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Office rental projections for the next one year continue to point to solid growth across all prime markets, according to a recent RICS’ India Commercial Property Monitor. In terms of the city breakdown, Bengaluru exhibits stronger rental growth projections when compared with Mumbai and the National Capital Region (NCR).

Capital value expectations for the next one year for office, retail and industrial segments are slightly lower. Still, solid growth is expected across segments over the next one year. Likewise, respondents also lowered their expectations for rental growth for a second consecutive quarter, with the largest downgrades coming in the industrial segment.

Credit conditions have improved slightly in the third quarter, possibly because of a further cut in the RBI’s key policy rate in August, this year. The Investment Sentiment Index was unchanged during the third quarter, again posting a reading of +6. This measure is an indication of marginally positive momentum behind the investment market. Investment enquiries increased in the office sector, with the pace of growth, exceeding that of the previous quarter. Meanwhile, demand was flat in the retail portion of the market, and fell for industrial assets. The supply of property for investment purposes held steady for the third consecutive quarter.

Tenant demand increased at a reasonably solid pace in the office sector, picked up only marginally in the retail sector, while demand for industrial space fell during the third quarter. Availability of leasable space was more or less unchanged for the second successive quarter, although a slight rise was reported in the retail segment.

Meanwhile, landlords opted to increase the value of incentive packages in the office and retail portions of the market.

RICS’ India Commercial Property Monitor is a quarterly guide to the trends in the commercial property investment and occupier markets. The guide is based on survey questionnaires sent out to RICS members over a month long period ending  October 6, 2017. Respondents were asked to compare conditions over the latest three months, with the previous three months and give their views on the outlook.
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