Real Estate

Tech-driven companies continue to command office rents in India: JLL

Anil Urs Bengaluru | Updated on December 27, 2019 Published on December 27, 2019

A representational image.

Premium office sub-markets in Delhi, Gurgaon, Mumbai and Bengaluru are featured in the JLL’s Global Premium Office Rent Tracker (PORT) that ranks 86 sub-markets spread over 76 cities globally.

JLL has released the fifth edition of PORT, in which Mumbai ranks in top 40.

“World over, including India, technology-driven companies continue to command office rents. Occupancy costs around the world continue to rise for premium offices; With new supply coming in, rental growth is likely to decelerate in 2020. While Occupiers will continue to look at alternate and more affordable office options,” Ramesh Nair, CEO & Country Head – India, JLL said.

According to JLL globally, with new construction expected to peak over the coming year, the supply of premium office space is likely to gradually increase. Although occupier choice is increasing, premium space is still not in plentiful supply. Among the top office markets, the overall vacancy rate remains in the low single digits. In India, while the net absorption across cities has more than doubled in the third quarter (July-September) of 2019 the vacancy levels have remained almost at similar levels since 2018.

It further added, while the banking and financial services industry continues to be the main driving force of premium office rents, technology firms – particularly online platforms – are playing a greater role in pushing premium office occupancy costs. Indian cities are no different.

According to the Third Quarter Office Market Update from JLL IT/ITeS occupiers accounted for nearly 50 per cent of overall leasing across Indian cities.

Nair said, “To put things into perspective, 2017 and 2018 witnessed net absorption of 28.7 million square feet and 33.2 million square feet, respectively in the entire year. A significant surge was witnessed in Q3 2019 with net absorption more than doubling as compared to the same period last year – from 5.3 million square feet in Q3 2018 to 10.9 million square feet in Q3 2019. This strong growth in demand was mainly led by strong expansion of IT/ITeS (48 per cent of overall leasing) and BFSI (11 per cent of overall leasing) occupiers.”

Published on December 27, 2019
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