Hong Kong is the world’s most expensive office space location with workstation cost of Rs 17.5 crore per annum
Delhi-NCR has emerged as the most expensive office location in India with rental values of Rs 430 sq ft per month and per workstation cost of over Rs 3.5 lakh per annum, says a report by global real estate consultancy firm Cushman & Wakefield titled Office Space Across the World 2017.
Delhi-NCR is ranked 84th in the global stacking of most expensive office locations. Other Indian cities are ranked below 100, making India office markets one of the most affordable in the world.
The Indian office space absorption is largely led by the services sector with IT-BPM making close to 50 percent of total office space requirements. Added to this, the growing trend of start-ups in India has also contributed to office absorption.
Hong Kong emerged as the most expensive location per workstation cost of over US$ 27,000 per annum (Rs 17.5 lakh), followed by London and then Tokyo. The report evaluates 215 global locations (prime office markets in each city) and ranks their occupancy costs per workstation (including base rents and common area maintenance charges) and workplace densities for newly developed or refurbished office space globally.
Gurgaon CBD, the other major office market in Delhi-NCR, is currently at Rs 120 per sq ft per month, with each workstation space costing Rs 100,800 per annum (US$1,549). This location, while having a vacancy of below 5 percent has been high on demand. The rentals have gone up by nearly 45 percent since 2013 on account of consistent demand from IT/ ITeS and other sectors, says the report.
Mumbai’s Bandra-Kurla Complex (BKC) was the second most expensive location for rental costs of over Rs 2 lakh per annum per workstation with each workstation occupied at a monthly rental of Rs 277 per sq ft per month. Given the space constraints in the city, it is no surprise that the density is also the highest in the country. The demand from front office in BKC has been high with most companies in the BFSI, Consulting and IT/ ITeS services companies have been strong in their demand in this area.
Kolkata’s CBD was ranked the third most expensive location to have a workspace with each workstation costing approximately Rs 95,000 per annum. The CBD comprises of locations such as Park Street, Camac Street, Elgin Road, locations which continue to be the most sought-after in the city. Even while the city faces an overall vacancy rate inching over 50 percent, the office space absorption remains concentrated in these busy office locations with steady demand from sectors like BFSI, consumer companies and consulting and media companies.
Bengaluru, which is the largest office space market by volume of absorption in India was ranked at a global 213 out of 215 destinations with workspaces that cost Rs 75,000 per workstation annually. The average cost per month for Outer Ring Road, which is a prime market witnessing the majority of the office demand and amongst the highest rental increases, is estimated at Rs 86 per sq ft per month. The IT-BPM sector, which employs about 3.9 mn Indians and is the largest services sector employer in the country, is focused on economising on the per head usage desk space through workspace strategies like rotation of desks, increasing collaboration spaces, and hot-desking concepts, etc.
Hyderabad (214th globally and seventh in India) and Ahmedabad (215th globally and eighth in India) made up the last two spots in the global as well as the Indian ranking space with the average workstation cost ranging from Rs 57,000 per workstation per year and Rs 40,000 per workstation per year, respectively.
“Indian office spaces are competitive globally in terms price, design and desk space. This coupled with strong talent pool provides for a winning combination for entry and expansion of global companies in India. Our office space absorption is largely led by the services sector with IT-BPM making close to 50 percent of total office space requirements. Added to this, the growing trend of start-ups in India has been contributing in creating employment as well as office absorption. Both these phenomena benefit greatly because of lower office space costs,” says Anshul Jain, country head and managing director, India, Cushman & Wakefield.“Globally, as workstation costs rise, it’s crucial that employers get the most out of their workforce by providing work environments to help attract and retain the best talent in a globally competitive marketplace. There’s a tipping point when density is too high, or the amount of collaborative space is too low. Both can be a hindrance to people getting the work done. As competition heightens between spaces and cities, consideration of user experience and employee well-being is imperative.”