Prime central business districts (CBDs) in at least two out of three Indian metros recorded steady rental growth according to the recently released Knight Frank Asia-Pacific Prime Office Rental Index Q3 2017. The index that tracked 20 key international markets in Asia, recorded 0.6% increase in the September-ending quarter over Q2 2017.
Among Indian CBDs Connaught Place in Delhi recorded 2.1% rise in prime office rentals between Q2 and Q3 – the second highest only after Bangkok which topped the index with rental appreciation of 4.4% in the same period. In fact, with sustained demand, no negative rental price changes have been reported in the capital city since the March-ending quarter of 2014.
Further, despite 200,000 sq. m. of new supply hitting Bengaluru’s CBD, the tech hub witnessed rental rise of 1.4%. While rental values in Mumbai’s Bandra Kurla Complex remained steady vacancy levels dropped lower and limited new supply entered the market.
The 12-month forecast however, shows increase in office space rents for all the three CBDs.
The favourable outlook assumes importance in the wake of implementation of the Goods and Services Tax (GST) that raised government tax on commercial rents to 18% from 15% earlier.
Dr. Samantak Das, Chief Economist and National Director- Research, Knight Frank India, said, “The prime office rentals are showing an upward trend. These markets are generally driven by non-IT sectors. The quality supply is limited and we do see the upward pressure on rentals to in the coming 12-month period.”
Among other noteworthy trends prime rents in Singapore increased for the first time since late 2014, even as vacancy rates continued to rise above 15% courtesy huge supplies over the past 6 months.
Overall all the report expects rents in 16 cities out of the 20 markets either remain steady or increase, up from 15 in the previous forecast.