Asia Pacific Office market report by Cushman & Wakefield – that compared the rental values of Central Business Districts (CBD) across Asia Pacific – ranks NCR as the 5th most expensive CBD location in the region while Mumbai – CBD ranked 10th most expensive location in APAC. Traditionally expensive office destinations of Hong Kong, Singapore and Tokyo (continued to hold the top three positions respectively.
Among a total of 25 cities across Asia , Bangalore and NCR saw the highest rental value rise in office market rentals in Q1 2012 (Quarter ended March 2012). Bangalore CBD recorded an increase of 18% while NCR – CBD recorded an increase of approximately 14% over the previous quarter (quarter ended December 2011). Jakarta – Indonesia (11.4%) Shenzhen – China (7.5%) and Adalaide – Australia (6.4%) completed the top 5 fastest growing office rentals. On the other hand, Hong Kong (-5), Singapore (-4.7%) and Tokyo (3.9%) recorded corrections in their CBD rental values in Q1 2012.
Ravi Ahuja, Executive Director, Office Transactions, Cushman & Wakefield India , “CBD locations across most cities of Asia particularly Hong Kong had witnessed a significant run up in rental and capital values over the last year however most Asian markets are currently depicting signs of stability, with some key emerging markets of India still showing growth owing to the sustained demand generated specially from Banking & Consultancy, Automobile, Engineering and Pharmaceutical Sectors. There has been a clear preference for cost efficient locations which is the reason why traditional high cost locations have seen a slight correction, while cities such as Bangalore, New Delhi – NCR and Bangalore have seen a stable rise. These markets are high on the value proposition with inherent demand for services / products as well as provide quality work force.”
“The APAC market is expected to remain strong with a GDP growth forecast of approximately 5.7% in 2012 and 5.9% in 2013. The growth is expected to be driven by the domestic demand supported by favourable economic and fiscal policies. What remains uncertain is the impact of the economic and fiscal measures being taken in the Euro Zone countrie,” he says.
New Delhi – CBD which continues to witness restricted and limited supply, emerged as the most expensive office market destination in India at the end of Q1 2012. With a rental value of INR 366/ sft/m and having witnessed a rise of approximately 14% over the previous quarter, rentals in the New Delhi CBD location’s have surpassed rental values prevailing in the Mumbai CBD and Bandra Kurla Complex (BKC), BKC will continue to see sustained supply and absorption thanks to the continuing strong trend of relocation from South Mumbai to North Mumbai’s BKC (New CBD). There is a notable short fall of quality space in the micro – market ensures that any new supply / vacancy in quality office space, in NCR or BKC gets absorbed at a premium thereby pushing the rental values upwards. Given the demand for space, many developers are now looking at refurbishing existing buildings to ensure that the momentum is maintained.
Bangalore which has traditionally been a high absorption market – 11 million YoY, witnessed the highest percentage rise in rental values of the CBD location. At 18% increase in rental values over previous quarter, it was the fastest growing office market across Asia in Q1 2012 .
“Except for the uncertainity of the Eurozone, the next two years is expected to see stability in economic condition which is expected to propel a growth in the office market. With fundamental economic measures like monetary easing and policy decisions in the anvil, there is expected to be an increase in confidence amongst occupiers,” Ravi adds.
Rest of the markets across India remained stable with no change to the rental values in the CBD locations. Chennai CBD recorded a rise if moderate 3% while Mumbai, Pune and Hyderabad remained unchanged. Ahmedabad saw a rental increase of approximately 6% q-o-q owing to a steady interest from companies – both domestic and international to set up presence in the region; though the average size of office space requirement is restricted compared to other locations.
