According to a recent report by Colliers International, Q1 of 2018 saw a 23% year-on-year increase in office space demand, with pan India absorption recorded at 11.4 mln sqft. With the demand for office space intensifying, the rental values have also increased in several active micro-markets across India. Of the top 10 micro-markets that witnessed highest on-year growth in rentals, six were recorded to be in Bengaluru with 11-26% rise.
Scarcity of Grade A office space in preferred micro-markets has primarily led to the rental rise in select micro-markets of Delhi NCR, Kolkata and Hyderabad too.
“The commercial real estate market is likely to remain robust with increased investor activity, sustained demand from technology companies and growing interest from various industry occupiers like manufacturing, flexible workspace, logistics and warehousing. The demand will be well supported by Grade A new office supply of about 117.0 mln sqft, which is scheduled for completion over 2018-2020,” said Ritesh Sachdev, senior executive director, Occupier Services at Colliers International India.
Bengaluru’s Bannerghatta Road has topped the list with 26% on-year rise in rentals, followed by Central Business District with 25% growth, while Electronic City and Secondary Business District including Indiranagar and Koramangala saw rentals appreciating 17.6% and 14.3%, respectively.
Kolkata’s Sector V micro-market recorded a 14% on-year escalation in rents during the period. Bengaluru’s Outer Ring Road witnessed 12.7% rise and Whitefield micro-market witnessed an increase of 11.1%.
Connaught Place, the Central Business District area of Delhi NCR, witnessed an annual rental increase of 10.8%, with rentals in Delhi Aerocity also rising by the same percentage, the report added.