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Mumbai’s office market reported a 4 per cent quarterly increase in office rents on the back of rising demand from co-working spaces as well as the traditional finance and IT sectors. The increase is second only to Tokyo in the Asia-Pacific, as most other office occupiers in the region have delayed significant real estate decisions amid rising US-China trade tensions, Knight Frank said today.
After a strong showing in Q2 2018, Bengaluru’s office market normalised, recording a 0.4 per cent quarter-on-quarter growth, while office rents were flat in the National Capital Region, said the report on AP Prime Office Rental Index for Q3.
Looking ahead, rents in Bengaluru are expected to climb steadily given steady demand and limited supply conditions. “Rents in Mumbai rose 3.9 per cent on sustained demand from not only the traditional finance and IT sectors, but also co-working operations that have been aggressively expanding in the city.
“Rentals across major markets have shown a positive trend due to factors such as growing demand and a somewhat restricted supply scenario. The office market space in both Bengaluru and Mumbai has not only revealed optimistic growth in recent times but is also slated to strengthen further,” Shishir Baijal, Chairman and Managing Director, Knight Frank India, said.
“Going forward, we expect these factors will help major commercial markets to remain on a sound footing and boost the rental segment in the region,” he added.
Tokyo recorded the highest increase this quarter at 5.6 per cent, on the back of strong occupier demand and limited supply. Office rentals in Hong Kong grew 2.7 per cent, Melbourne 2.6 per cent and in Sydney by 2.5 per cent.
All the other 13 office locations in APAC reported a decline or sub-one per cent growth during the quarter. “While we are beginning to feel the impact of the trade tensions flow through the Asia-Pacific office markets, sound economic conditions are expected to support office demand and drive steady rental growth across the region,” Nicholas Holt, Head of Research for the Asia-Pacific, said.
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