Bengaluru CBD 5th Fastest Growing Office Space In Asia-Pacific: Report
Growth in rentals in Bengaluru’s Central Business District (CBD) Brigade Road has been the fifth-highest seen in Asia-Pacific in the April-June quarter of 2019, shows Knight Frank's Asia-Pacific Office Rental Index. While Delhi’s Connaught Place (CP) and Mumbai’s of Bandra-Kurla Complex (BKC) remain the priciest office spaces in India, Bengaluru’s CDB clocked the highest annual growth in terms of rents, the index shows.
Office rents increased nine per cent in Brigade Road on a year-on year basis, while they increased by five per cent and 1.4 per cent in BKC and CP, respectively. A sq ft of space in Brigade Road currently costs Rs 1,495 annually while it costs Rs 3,960 and Rs 3,603 in CP and the BKC, respectively, shows the index that tracks commercial real estate in 20 cities in the region. While no change is expected in the rents in Delhi CBD, a marginal increase is expected in Bengaluru and Mumbai.
The index showed that the highest growth in annual rents was seen in Melbourne (16 per cent), followed by Tokyo (12 per cent), Bangkok (10.4 per cent) and Singapore (10.3 per cent). Rents are, however, the highest in Hong Kong in the region, at $219 per sq metre per month. On a quarter-on quarter basis, however, rental growth in Indian cities has been negligible, primarily because of an increase in supply of office space.
"Indian office rents remained stable in Q2 with Bengaluru, Mumbai and NCR reporting 0.0 per cent quarter-on-quarter growth as the market saw an influx of new supply in H1 2019; 2.2 million sq metres, a 31 per cent year-on-year growth, was supplied during the period," says the report.
“The IT/ITeS (information technology and information technology-enabled services) sectors continue to absorb the lion's share of new space coming online, accounting for 35 per cent of all transacted volumes in the first half of 2019 but has started to show signs of slowing, on lower corporate spending and moves towards in-sourcing,” says the report, adding that ‘this weakness has, however, been offset by strong demand from co-working operators’.
Co-working transaction volumes rose 42 per cent year-on-year to 0.37 million sq metres in H1 2019, the report says.