Office rentals to remain strong across Bengaluru, Mumbai & NCR: Report

Office rentals to remain strong across Bengaluru, Mumbai & NCR: Report

August 2, 2017 in Uncategorized

In the backdrop of strong demand from office space occupiers, commercialrentals in National Capital Region, Mumbai and Bengaluru will continue to outperform, said RICS’ India Commercial Property Monitor based on a survey. Of these cities, Bengaluru is expected to do better than the other two cities.

Office rental forecasts over the next twelve months have been lowered slightly to 3.3% in the second quarter of 2017 from 3.5% in the first quarter of the year. This is due to a moderation in rent expectations for prime office space, though office rental forecasts are still seen up 6.3% over the next year.

“Strong economic growth is generating demand for office space. The last two years 2015 and 2016 have been quite good for the segment with pan India office vacancy at its lowest over 5 years. Vacancy levels in some cities such as Bengaluru, Chennai, Hyderabad and Pune is around 5-10%,” said Sachin Sandhir, Global Managing Director-Emerging Business, RICS South Asia. “On the supply side, there is a shortage of grade A office space. It is less than half of the current office stock across top eight cities at 280 million sq ft. The gap between demand and supply of good quality office space Is keeping office rentals strong.”

Retail properties in NCR are, however, expected to see significantly less rental value appreciation over the next year than their counterparts in Bengaluru and Mumbai.

According to RICS, respondents are modestly bullish on capital values over the next three months. However, this is mainly driven by the office segment as the outlook for the industrial and retail segments are flat over the next quarter. Respondents, however, do expect capital values to increase across all market segments over the next year.

When viewed at the city level, respondents revised capital value forecasts over the next year lower, particularly in Bangalore. Headline capital values are now seen increasing 3.9% over the next year after contributors forecast a 6.1% appreciation last quarter. However, this market is still seen outperforming Mumbai and the NCR where headline capital values are seen up 3.8% and 2.9% over the next twelve months, respectively, the report added.

(source by:-The Economic Times)

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