Bengaluru’s CBD eclipse Connaught Place, BKC in office rental growth: Knight Frank’s Asia-Pacific Prime Office Rental Index Q2
~Key business districts in Indian metros among top six in the index of 20; Bangkok’s CBD and Kuala Lumpur’s City Centre see negative growth~
INVC NEWS Mumbai, Healthy surge in rentals across key business districts reinstated the growing prominence of Indian metros on the global map of high-rent yielding commercial spaces according to the Asia-Pacific Prime Office Rental Index for Q2 2017 by Knight Frank. The global price index that compares rental values of prime office spaces across 20 international markets rose by 1.2% in the quarter ending June 2017. Sustained interest from the IT/ITes sector pushed rents in Bengaluru’s Central Business District by 4% - the highest among other key CBDs in India. The rent appreciation was also the third highest globally after Phnom Penh’s City Centre (4.2%) and Tokyo’s Central 5 Wards (4.1%). Other established business districts such as the Connaught Place in Delhi also saw a 2.2% climb in rentals, courtesy a lull in supply of new office spaces and dwindling vacancies. The Bandra Kurla Complex in Mumbai recorded a quarter-on-quarter increase of 2% in rents in the June ending-quarter of 2017. Vacancy levels in the financial capital, however, got a boost with a fresh office supply of approximately 530,000 sq. in the last quarter. Dr. Samantak Das, Chief Economist and National Director-Research, Knight Frank India, said, “Prime business districts in the three Indian metros have seen robust rental growth courtesy strong demand and limited vacancies. This scenario is expected to remain for a year owing to a supply crunch of new office space. Despite the global pressures on the IT/ITes sector triggered by automation and limitation in demand for business the technology-driven Bengaluru market has performed well and it expected to do even better. But prime office assets in Mumbai and Delhi are likely to see a slower growth trajectory having already scaled high-rental values.” While Phnom Penh topped the chart this quarter with 4.2% increase, Bangkok the erstwhile topper saw its first decline this quarter in close to three years. Over the next 12 months, we expect rents in 15 cities out of the 20 markets tracked to either remain steady or increase, which is the same as our previous forecast.