Indian cities top global rentals chart in commercial real estate
Global Rentals Chart
Owing to a vigorous demand from start-ups and e-commerce business, office rentals in major cities of India are experiencing a significant surge. The rising appetite for Indian commercial properties is attributed to about 67% of investments flowing into Indian real estate market from overseas which has been noted to be the highest among all other countries.
Indian cities of Mumbai, Delhi and Bangaluru have topped the global commercial property market with regards to annual rental yields as demand for commercial spaces has picked up in recent times. While Bengaluru topped the list with 10.5% annual yield, other cities like New York, Singapore, London, Tokyo and Hong Kong ranged between 2.9% and 7%, indicates a global survey of property consultant Knight Frank. Mumbai and Bengaluru have also featured among the list of top 5 global cities for future rental growth and the anticipated growth is nearly 22% and 16% for both cities respectively.
Currently, these cities are facing severe paucity of good quality office space in the face of strong demand which is creating an upward pressure on office rentals that is expected to scale up in the range of 6-7% in the next six months year-on year,” says Samantak Das, Chief Economist & National Director of Research, Knight Frank India.
Although the aggregate vacancy level of commercial spaces is at 17%, occupiers and investors are facing a challenge in procuring quality office spaces across prime business districts in the country where vacancy is in single digits.
The Indian commercial real estate sector is making a comeback after experiencing massive slump for over three years. With a healthy pipeline and recent large ticket transactions, early signs of revival are being observed.
Big corporate occupiers are returning to the market hinting at an improved business sentiment. Bengaluru and Mumbai have been leading with these large transactions. In May this year, while Tata Consultancy Services leased over two million sq ft of built-to suit space at Hiranandani Estate in Thane in Mumbai, Flipkart hired a 2-million sq ft custom-built office campus in Bengaluru.
