Office market in India will continue to be robust despite sluggish economic growth, with international property consultant Knight Frank in its recent report - Asia-Pacific Outlook Report 2020 - projecting an increase in office rentals in the Central Business Districts (CBDs) of Mumbai and Bengaluru in 2020, while the rental growth in the CBD in National Capital Region (NCR) is expected to remain stable.
The CBD of Bengaluru was the best performing market in the Asia Pacific in Q3 2019, with rental growth of 17.6 per cent, according to Knight Frank Asia-Pacific prime office rental index Q3 2019. The CBDs of Connaught Place in NCR and Bandra Kurla Complex (BKC) in Mumbai were the seventh and eleventh fastest-growing prime office markets in the Asia-Pacific region, respectively, with a comparatively modest 4.4 per cent and 2 per cent year over year (YoY) rental growth in Q3 2019.
"Office markets in cities like Mumbai, NCR and Bengaluru continue to enjoy healthy rental growth, despite the weaker economic sentiment in 2019, mainly due to the rapid expansion witnessed in its IT industry. Multinationals continued to expand robustly especially in Bengaluru because of availability of the right talent pool and new office assets at comparatively low rents. We expect the trend to continue for these markets as the demand for office space is expected to grow in 2020 as well,” said Shishir Baijal, Chairman and Managing Director of Knight Frank India.
In the latest survey - Knight Frank – FICCI – NAREDCO - ‘Real Estate Sentiment Index Q3 2019’, majority (82%) of the real estate stakeholders have expressed an optimistic outlook for the office sector, backed largely by a robust office supply pipeline for the next six months. Real estate stakeholders also expect the rentals for Grade A office spaces to inch up in the next six months.
Grade-A office rents across the Asia-Pacific region are expected to fall between 0 and -3 per cent in 2020, down from the 0.6 per cent rise in the first nine months of 2019, as occupier demand continues to soften.
