A resurgence in IT/ITeS sector hiring since the first half of 2019 and increased activity by manufacturing companies kept demand buoyant in Bengaluru as the city clocked the highest rental growth in the Asia Pacific region at 17.6 percent during the July-September quarter of 2019, according to a new report.
Connaught Place in Delhi saw a 4.4 percent year-on-year rental growth and Bandra Kurla Complex in Mumbai recorded a 2 percent rise, Knight Frank in its recent report Asia-Pacific Prime Office Rental Index Q3 2019 said.
Connaught Place in the National Capital Region (NCR) and Bandra Kurla Complex (BKC) in Mumbai are ranked 7th and 11th in the 20 fastest growing prime office markets in the Asia-Pacific region, respectively, the report said.
CBD Bengaluru was followed by the CBDs of Melbourne and Bangkok at the second and third spots, with a year-on-year office rental growth of 15.5 percent and 9.4 percent, respectively.
Bengaluru's CBD, comprising areas such as MG Road, Infantry Road and Residency Road, has registered the highest year-on-year (y-o-y) rental growth in the Asia-Pacific region at 17.6 per cent in July to September quarter this year (Q3 2019), it said.
In terms of rentals, Hong Kong, with a monthly rental value of USD 206.6 per sqm, was the most expensive office market in Asia-Pacific in Q3 2019, followed by Tokyo (USD 110.9 per sqm) and Singapore (USD 80.5per sqm).
The CBDs of NCR and Mumbai were ranked as the 5th and 7th most expensive prime office markets in Asia-Pacific, with monthly rental values of USD 51.8 per sqm and USD 46.2 per sqm, respectively, the report said.
Knight Frank’s Asia-Pacific Prime Office Rental Index, which tracks office rental levels of 20 frontline cities across the Asia-Pacific region, rose 0.1 percent quarter-on-quarter to 157.3 in the third quarter of 2019. Year-on- year, the index rose 1.8 percent, decelerating from the 3.4 percent rise witnessed in the second quarter of 2019.
Of the 20 cities tracked by the index, 12 recorded either stable or increased quarterly rents; 3 less than the 14 reported in the previous period.
“The office market has been witnessing a steady growth in India, which is adequately reflected in the growth in rental values in prime office markets. Bengaluru, in particular, has seen continued growth in leasing activities, due to the competitive pricing offered by its CBD, as against its counterparts in New Delhi and Mumbai. Bengaluru CBD sees continuous demand, which in turn has pushed the rental values upwards.
"CBD in New Delhi continues to remain attractive, however, low vacancies and lack of Grade-A supply have restricted leasing volumes in this location. Mumbai CBD, on the other hand, continues to be one of the most favourable office destination commanding high rental values. We expect the trend to continue for these markets as the demand for office space is expected to continue," said Shishir Baijal, Chairman and Managing Director of Knight Frank India.