The year-on-year change in these cities ranged between 8-17 per cent at some locations
With the office demand intensifying in the second quarter of 2017, an upward pressure on rental values was observed in a few micro markets, mostly in South cities like Bengaluru, Chennai and Hyderabad, says a report by Colliers Research.
The year-on-year change in these cities ranged between 8-17 per cent at some locations. In the first half of the year, Bengaluru and Hyderabad both witnessed single digit vacancy levels hovering between 8-9 per cent due to a dearth of quality Grade A stock thus leading to increased rental values in some micromarkets. In 2016, a few Pune micromarkets witnessed a year-on-year rental growth of up to 19 per cent. Although the supply woes continue across Pune micromarkets, rental values have stabilised in the second quarter of 2017, after a considerable increase in 2016.According to Colliers Research, the top 10 office micromarkets that witnessed the highest rental growth in 2017 are as follows:
- Bengaluru – CBD
Bengaluru CBD micromarket has always been the first preference of BFSI and IT occupiers primarily due to its connectivity and prime location. In spite of having limited availability of office spaces and supply, the micromarket has witnessed 17 per cent year-on-year rental appreciation.
- Chennai – Off CBD
Chennai office CBD micromarkets which is predominantly an IT market has observed 13% y-o-y rental growth. Apart from IT and BFSI, consulting companies have their setup in Guindy, MRC Nagar and Saligramam. In Q2 2017, Chennai Office CBD micromarket accounted for 16 per cent of total absorption.
- Gurugram – DLF Cyber City (IT)
DLF Cyber City is an iconic and landmark commercial hub in Gurugram and is the top preference of domestic and international occupiers. Due to superior infrastructure and quality office spaces, DLF Cyber City has witnessed 12 per cent year-on-year rental growth. The micromarket holds 9 per cent share in the total office space absorption in the second quarter of 2017.
- Pune – Hadapsar/Fursungi
Hadapsar market is emerging due to some notifying projects such as Magarpatta city and other projects offering large floor spaces. This micromarket is predominantly an IT/ITeS market with residential localities in the nearby catchment area. Hadapsar market has observed 10.2 per cent year-on-year rental growth.
- Pune – Kharadi
Kharadi is one of the fastest growing commercial micromarket and is rising as an IT hub. In the past few years, Kharadi has seen good projects like EON IT Park which is one of the largest IT Park in Pune. It will also witness significant amount of office spaces in the next three years. Rents in this micromarket have increased 10.1 per cent year-on-year.
- Bengaluru – EPIP/Whitefield
The commercial micromarket in EPIP/Whitefield has ample availability of large floor spaces and Grade A developments are attracting occupiers to consolidate their operations in this micromarket. The micromarket in the eastern Bengaluru has witnessed rental growth of 10 per cent year-on-year.
- Hyderabad – SBD
The SBD market in Hyderabad has prominent locations such as HiTECH City, Madhapur, Gachibowli and financial district. In the second quarter of 2017, 89 per cent of total leasing volume was concentrated in SBD due to superior amenities and reasonable rentals compared to other cities. Rents in SBD grew by 10 per cent year-on-year.
- Bengaluru – Electronic City
One of the preferred micromarkets in Bengaluru with comparatively cheaper rents than other markets of the city offering large floor spaces and superior quality office spaces which grew by an average of 9 per cent year-on-year.
- Chennai – OMR Post Toll
Increasing popularity of OMR Post Toll micromarket has shifted occupiers focus to this market and witnessed gross leasing of 33 per cent of total absorption in second quarter of 2017. This micromarket includes locations like Navalur, Sholinganallur and Pallavaram-Thoraipakkam Road which is popularly known as IT corridor of Chennai and has observed 8 per cent year-on-year rental growth.
- Bengaluru – Hosur Road