PTI: February 15, 2019
Mumbai:Bengaluru has emerged as the third fastest growing office market in terms of prime rental values for office space globally mainly due to continued supply crunch, a recent survey said.
According to a global study conducted by property consultant Knight Frank, the estimated growth in office rental values in Bengaluru by end of 2019 is expected to be 6.6 percent over Rs 125 per sqft per month in 2018 .
The report, that evaluates 33 global cities and gives insight on office rental growth and its forecast, noted that New Delhi, which stood at the fourth position, is expected to see a rise of 6.5 percent in prime rental values in 2019 on account of low Grade A supply in prime markets..
With demand remaining buoyant in the market from the IT/ITeS and the start-up sectors, the lack of quality space in key markets is pushing the rentals northwards, the report said.
New Delhi with prime rental values of Rs 326 per sqft, is also expected to see a rise of around 6.5 per cent on the back of constricted fresh supply in 2019, it said.
"Commercial segment continues to show growth in 2019, much like the year past when leasing activities breached the 46 million sqft and touched a historic high. However, the supply side has not been as robust, keeping rental growth positive at the same time," Knight Frank chairman and MD Shishir Baijal said.
He further said the trend of rental growth in prime markets is expected to continue in 2019 for prime Bengaluru and New Delhi markets, due to continued supply crunch.
"Mumbai is however expected to see stable rentals in 2019 with an outlook of marginal rental growth due to anticipated supply for 2019 in the prime market. This rental growth is also the prime reason for increased interest from institutional investors in acquiring income yielding assets in the commercial segment," Baijal added.
According to the report, Mumbai prime office rentals are expected to remain largely stable with an estimated growth of only 0.3 percent in 2019.
The recorded rental for prime markets in the city is around Rs 300 per sqft per month, which is is largely due to demand which is routing itself to secondary and peripheral locations due to high rental values in prime markets.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.