Delhi-NCR is the sixth most expensive office space rental market in Asia Pacific (APAC) for Q3 2023, with Hong Kong SAR topping the list. Strong demand from Global Capability Centres (GCC) has offset slower demand from flexible workspace providers. Prime office rentals in Delhi-NCR, Mumbai, and Bengaluru are steady and expected to remain so for the next year. Region-wide rental rates show quarter-on-quarter stability, with rental growth in developed markets counterbalancing declines in Chinese mainland markets. Delhi-NCR's prime office rent is Rs 340 per sq. ft per month, securing the sixth position in the APAC, while Mumbai ranks ninth at Rs 302 per sq. ft per month.
In a recent Knight Frank report, the Delhi-NCR region emerged as the sixth most expensive office space rental market in the APAC region for the third quarter of 2023. Hong Kong SAR secured the top spot on this list, underscoring the region's commercial significance. This report, recognized as the Asia-Pacific Prime Office Rental Index for Q3 2023, offers insights into the evolving landscape of office rentals in this thriving economic region. The demand for office space in India's largest occupier markets remained robust, with over 700,000 square metres leased during the quarter. This demand was primarily driven by significant interest in establishing GCC, offsetting slower demand from flexible workspace operators.
Delhi-NCR, Mumbai, and Bengaluru reported sustained strength in prime office rentals on an annual basis. Moreover, these rental rates are projected to remain stable for the next 12 months, underscoring the region's steady and reliable performance in the commercial real estate sector. Quarter-on-quarter statistics reveal region-wide rental stability, with a notable moderation in Chinese mainland market rate declines. Rental growth in most developed markets upholds this balance, reinforcing the report's findings that approximately 15 of the 23 cities reported either stable or increasing rents, mirroring the previous quarter's performance.
Shishir Baijal, the esteemed Chairman and Managing Director of Knight Frank India, articulated an optimistic perspective on the office market. He pointed out the improved physical occupancy and the resilience that the Indian office market has displayed since 2022. The rising demand in 2023 further corroborates this positive outlook, reinforcing the belief that the Indian office market is poised for short- to medium-term sustainability and growth. On a different note, Bengaluru occupies a unique position in this scenario. It stands as one of the least expensive prime office markets in the APAC region, holding the 19th position.
The prime office rent in this vibrant city is recorded at Rs 135 per square foot per month. What is even more noteworthy is that the rental value in Bengaluru is anticipated to remain steady over the next 12 months, reaffirming its economic stability and attractiveness to businesses. Meanwhile, in office space expenses, Singapore ranks second, trailing behind prominent commercial hubs in the APAC region like Sydney, Tokyo, and Seoul. Beijing secures the seventh position, Ho Chi Minh City the eighth, and Shanghai the tenth, all making significant contributions to the diverse office space rental landscape in the Asia Pacific.
Delhi-NCR's prime office market consistently maintains rental values at four-quarter levels. Currently, prime office rent in the city stands at Rs 340 per sq. ft per month, solidifying its position as the APAC region's sixth most expensive office market. Meanwhile, Mumbai ranks ninth in the APAC region, with prime office rent recorded at Rs 302 per square foot per month. Notably, despite the notable increase in transaction volumes, the report points out that rental levels have remained stable in the three largest occupier markets. This is attributed to landlords focusing their efforts on elevating occupancy rates, enhancing the overall equilibrium within the region's office space rental market.
This story was earlier published in MoneyControl
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