Office rentals set to rise in CBDs of Bengaluru, Mumbai in 2020: report

While NCR’s CBD is expected to remain stable Office space rentals are set to increase in the Central Business Districts (CBDs) of Bengaluru and Mumbai in 2020, while the rental growth in the CBD in National Capital Region (NCR) is expected to remain stable, a Knight Frank’s report – Asia-Pacific Outlook Report 2020 said.

“Office markets in cities like Bengaluru, Mumbai and NCR 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.

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 CBD of Bengaluru, comprising areas such as MG Road, Infantry Road and Residency Road, is expected to see more supply coming in 2020, while the demand is expected to remain steady as the information technology (IT) sector continues to expand.

The CBDs of Connaught Place in National Capital Region (NCR) and Bandra Kurla Complex (BKC) in Mumbai were the seventh and 11th fastest-growing prime office markets in the Asia-Pacific region, respectively, with a comparatively modest 4.4 per cent and 2 per cent Y-o-Y rental growth in Q3 2019.

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.

In the latest survey – Knight Frank – FICCI – NAREDCO - ‘Real Estate Sentiment Index Q3 2019’, the majority (82 per cent) 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.