Track2Realty: The emerging cities continue to dominate the rental growth in the region with Jakarta (Indonesia) witnessing the highest office rental growth (yoy) among 33 cities in Asia, followed by Manila (Philippines) at 2nd position and Shenzhen (China) at 3rd Pune (India) at 4th position while NCR (India) ranked at 10, says Asia Office Q1 2014 report of Cushman & Wakefield.
The report recorded a surge of nearly 19% in Pune within a year, primarily due to significant growth in the demand of Grade A buildings. Limited supply of stock and sizeable pre-commitments has resulted in these buildings commanding higher rentals, thereby contributing to increase in overall Pune rentals.
The demand for office space in NCR increased by nearly 5 times in Q1 2014 compared to Q1 2013 driven primarily by large size transactions of more than 100,000 sf from IT-ITeS and Consulting sector, leading to a rise in rents.
Sanjay Dutt, Executive Managing Director, South Asia said, “The business sentiment is likely to strengthen with the new elected Government. We believe the new government would aggressively pursue much delayed policy reforms that will help to boost investor confidence, both domestically and internationally. Consequently, we expect demand for office spaces to start improving from the second half of this year and show positive momentum next year. However, rentals are expected to remain stable with the exceptions of few micro markets such as Cybercity, Gurgaon, Lower Parel & Goregaon, Mumbai and Outer Ring Road, Bangalore. For most other micro markets there will be a slightly downward bias due to the double digit vacancy levels of 18%. However Grade A office and preferred locations is likely to show upward movement from the second half of 2015.”
Sigrid Zialcita, Managing Director of Research for Asia Pacific said, “Office market conditions showed a mixed performance in the region. Rental growth was slightly up across Asia Pacific over the year, with an overall regional rental rise of just 2.8% in Q1 2014. Limited availability of Grade A space should enhance landlord leverage and sustain rent increases in some of the core markets this year; However, mounting supply in the emerging markets of Delhi NCR, Kuala Lumpur and Ho Chi Minh City means that these cities will continue to remain favourable to occupiers.”
The demand for office space increased by nearly five times in Q1 2014 compared to Q1 2013, driven primarily by large size transactions of more than 100,000 sf from the IT-ITeS and Consulting sector companies leading to rise in rents.
Since significant demand was noted in Gurgaon(excluding MG Road and Cyber City) which accounts for nearly 56% of the Grade A availability in Delhi-NCR, rise in rents of available spaces in the sub-market added to the overall increase.
Furthermore, addition of 0.45 msf of office space in the Delhi International Airport submarket at significantly higher than the overall city rents added to the increase in weighted average rentals for the entire NCR.
