Office markets of Bengaluru and New Delhi are fast emerging as one of the fastest growing office markets globally in terms of prime rental. As per a global report by Knight Frank, rental values of offices in Bengaluru are expected to grow by 6.6% Y-O-Y by the end of 2019 over 2018, while New Delhi is expected to see a rise of 6.5% in prime rental values this year.
Unlike Bengaluru and New Delhi, Mumbai prime office rentals are expected to remain largely stable with an estimated growth of only 0.3% in 2019. The report mentioned that the Bengaluru saw a prime rental value of Rs 125 psf/month in 2018, mainly on account of low Grade A supply in prime markets.
Similarly, due to constricted fresh supply, New Delhi had prime rental values of Rs 326 psf /month. While both Bengaluru and New Delhi are experiencing low supply as compared to consistently rising demand leading to an increase in rental value, Mumbai has a decent supply in secondary and peripheral locations.
The report added further that vacancy rate will improve in New Delhi and Mumbai with current 16.5% (2018) and 19.8% (2018) to 15% (2021) and 14% (2021), indicating an increase in employment generation. Bengaluru will remain the same at 3.2%.
“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,” said Shishir Baijal, ET Realty reported. “However, the supply side has not been as robust, keeping rental growth positive in the same time.”
Talking about the world over trend, it is the cities of Melbourne and Sydney that will see the largest rental growth in 2019 with rents rising 10.1% and 8.6% respectively. Over the next three years, global markets will see further demand from both tech and co-working occupiers as new waves of the digital revolution will maintain growth momentum for office demand in tech-orientated global cities.