The Hindu Business Line : Global office market on road to recovery: Report

THE global office market continued on its road to recovery with overall stability in rents recorded over the year, according to a Cushman & Wakefield report.

"The number of locations recording positive growth increased and overall almost three-quarters of locations saw rents stabilise or rise over the year as a whole. Recovery was seen in the Asian markets, with regional growth of 10 per cent. On the whole, all of the major office markets recorded a positive uplift in rents, led by the Chinese and Indian office centres," the report said.

Demand, primarily driven by IT and financial services sectors, coupled with limited supply of quality space maintained upward pressure on rental values in the main Indian office centres. Mumbai which was positioned 19th last year climbed up to 18th position in the global office market.

"The office segment in Mumbai Central Business District witnessed increased leasing activity from multinationals and Indian corporates. Absorption levels remain high for grade `A' office buildings across business districts. Vacancy rates have fallen to an average of 5 per cent across Mumbai. Capital and Rental Values have risen 7-10 per cent in the last six months and are expected to remain firm for remainder of the year," the report said.

Besides the corporate office sector, demand from software development companies, business process outsourcing and call centres continue accelerating growth in suburban locations of Mumbai just as much as they remain buoyant in the National Capital Region (NCR), Bangalore, Hyderabad, Chennai and Pune.

According to the report, in the NCR, the increased demand momentum should continue and provide attractive opportunities for real estate investments. "A significant growth of 20-25 per cent over last year in terms of demand for real estate is expected, bulk of which would be due to the impending second stage of growth of the tech firms already established in the NCR.

"Supply of prime properties on the other hand is low. Consequently a lot of redevelopment and re-modelling of existing Grade B buildings across the NCR in view of the increased demand would ensue so that they could command better rentals," it added.

Across the world, there was little change at the top position with London and Paris retaining their status as the most expensive locations for office space. Tokyo and New York remain the most expensive locations to occupy office space in Asia and the Americas.

Hong Kong was the biggest climber in the ranking, moving from 17th to 6th place.

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