Bengaluru stands as the third fastest growing office market in the world with the office rental poised to grow by 6.6% in the city by the end of this year. Another city in India which is also expecting to witness a rise of 6.5% in the rental values in 2019 is the capital city of New Delhi. It will be the fourth fastest growing office market at a global level. The statistics have been put forth by the Knight Frank-Global Outlook 2019 report.
Low Supply Leading To A Rise In Rentals
In the year 2018, the prime rental value in Bengaluru was INR 125 per square foot/month. The demand continued to remain buoyant in the prime market especially coming from the startup and IT/ITes sectors. But the lack of quality spaces for offices in the key markets is causing a hike in the rentals northwards.
The same is the case in New Delhi where currently the value of prime rental is INR 326 per square foot/month. If the restricted fresh supply continues, IT will see a rise of 6.5% this year. The findings point out that the prime rental values in the Indian economic capital Mumbai will remain stable at 0.3% as possible growth in Grade A supply is expected this year. The office rental growth forecasts by 2021 reveal that Bangaluru will lead by 13.2% followed by Mumbai at 11.5% and New Delhi at 10.1%.
Vacancy Rate Shows Improvement In Delhi & Mumbai
The job vacancy rate in New Delhi and Mumbai is showing improvement. Currently, it is 16.5% in New Delhi and 19.8% in Mumbai and is expected to grow to 15% and 14% in New Delhi and Mumbai respectively by 2021. The vacancy rate in Bengaluru will remain the same at 3.2%, says the report. The annual report in its evaluation of the current year reveals that there may be quite a shift in the focus for investments made in properties. The rising debt cost and uncertain global economy will also play a major role in this shift in focus.
The report evaluated 33 global cities and offered insight on the growth in the office rents, retail and industrial outlook, and office occupier forecast. The report also offered facts on other alternate sectors such as healthcare, logistics, and hotels.
Chairman and Managing Director of Knight Frank India, Shishir Bajaj said,
“Commercial segment continues to show growth in 2019, much like the year past when leasing activities breached the 46 million square feet and touched a historic high. However, the supply side has not been as robust, keeping rental growth positive at the same time.”
According to the report, Sydney and Melbourne are the two topmost cities that will witness the largest growth in the rental in 2019. The rents will rise by 10.1% and 8.6% in Melbourne and Sydney respectively.
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