Top 10 office markets that witnessed highest rental growth in Q3 2018: Colliers report

[ecis2016.org] Rising demand, coupled with lower vacancies in premium Grade A buildings, have led to rental value appreciation of 9.4-32 per cent in select office micro-markets across cities, says a report by Colliers Research

India witnessed a robust demand for office spaces in Q3 2018, recording approximately 12.3 million sq ft of gross absorption, indicating a 23 per cent growth over the corresponding period in 2017. As a result of rising demand, coupled with lowering vacancies in premium Grade A buildings, the office rental values have recorded an increase in select micro-markets across cities.

You are reading: Top 10 office markets that witnessed highest rental growth in Q3 2018: Colliers report

“Key micro-markets in Bengaluru, Kolkata, Pune and Chennai, made it to the list of top 10 micro-markets, which witnessed maximum year-on-year (YoY) rental increase in the range of 9.4-32 per cent in Q3 2018. Of the top 10 markets, Bengaluru had the highest representation, with six markets, reinforcing strong occupier preference,” said Ritesh Sachdev, senior executive director – occupier services, at Colliers International India.

As per Colliers Research, the top 10 office micro-markets that witnessed the highest rental growth YoY in Q3 2018, are as follows:

Bengaluru – Bannerghatta Road

The southern micro-market of Bengaluru, Bannerghatta Road witnessed the highest rental increase of 32 per cent YoY, equating to closing rents in the range of Rs 70-95 per sq ft per month, in Q3 2018. This could be predominantly attributed to low vacancy levels, with no visibility on upcoming supply. This quarter recorded some large-ticket transactions by occupiers such as Swiggy, Rambus, WeWork and Practo. In the upcoming quarter, the demand is expected to increase from the technology sector and flexible workspace operators, as more transactions are in the pipeline.

Bengaluru – Electronic City

Read also : HC tells Tamil Nadu to publish master plan for Kodaikanal

Electronic City is expected to receive an infrastructure upgrade, with the near completion of the Namma Metro project by 2022. In anticipation of this, many developers such as Bagmane, Ajmera, Salarpuria Satva, among others, are planning commercial developments in the micro-market. We expect the demand in this micro-market to increase manifolds. In Q3 2018, there was a 22.9 per cent YoY rental increase.

Bengaluru – EPIP Zone/Whitefield

EPIP Zone/Whitefield in Bengaluru witnessed a YoY rental increase of 16.3 per cent in Q3 2018. The Namma Metro project is expected to start operations by 2022 and aligning with this timeline, is a robust supply pipeline of 9.2 million sq ft, which is the largest share in Bengaluru. We expect the rents in this micro-market to exponentially surge at 8.3 per cent, compounded annually over 2018-2021.

Bengaluru – CBD

Bengaluru’s Central Business District (CBD) witnessed a gross absorption of 0.3 million sq ft in Q3 2018. There is an increasing demand from flexible workspace operators in this micro-market and we expect a finite supply of 1.5 million sq ft to push rents northwards. In Q3 2018, the CBD witnessed a rental increase of 14.3 per cent YoY.

[ecis2016.org] Top 10 office property markets that witnessed highest rental growth in Q2 2018: Colliers report

Bengaluru – Hosur Road

Hosur Road in Bengaluru witnessed a rental increase of 14.3 per cent YoY in Q3 2018, owing to single-digit vacancy levels amidst consistent demand by technology, consulting and flexible workspace operators. A limited supply pipeline of 0.8 million sq ft is expected to inflate rentals further.

Bengaluru – Outer Ring Road (KR Puram-Hebbal)

The most active office destination in Bengaluru, Outer Ring Road (ORR), which holds the maximum Grade A office stock of around 50 per cent, furnished the maximum volume of absorption, constituting 38 per cent in Q3 2018. We expect a supply pipeline of 7.2 million sq ft by 2021, to temporarily cater to the rising demand. However, infrastructure projects such as the proposed metro construction, are expected to waver occupier interest temporarily in this micro-market. In Q3 2018, ORR witnessed a rental increase of 10.7 per cent YoY.

Kolkata – CBD

Read also : Altico to provide Rs 300 crores to Phoenix Group for projects in Hyderabad

The CBD in Kolkata recorded a 10.5 per cent rental increase YoY in Q3 2018. Companies across varied sectors, including flexible workspace and manufacturing, namely, Awfis and Volvo, respectively, expanded their office space in this micro-market in Q3 2018. Due to limited availability of Grade A office space amidst consistent demand in the micro-market, the rents have been appreciating.

Chennai – Old Mahabalipuram Road Post Toll

Old Mahabalipuram Road (OMR) Post Toll in Chennai witnessed a 10 per cent rental increase YoY in Q3 2018. The demand for office space is moving from the CBD to OMR Post Toll that constituted 41 per cent of the total office leasing in Q3 2018. The availability of quality contiguous floor plates, has led occupiers working with expansion strategies, to consider this micro-market.

Pune – Airport Road/Pune Station

Airport Road/Pune Station recorded a 10 per cent rental increase YoY in Q3 2018. About seven per cent of the gross absorption in YTD 2018 (January to September) in the city, was concentrated in the micro-market and was driven by technology occupiers. Due to limited availability in existing stock, as suggested by the three per cent vacancy at the end of Q3 2018, rental values in this micro-market are witnessing an increasing trend.

Pune – Kalyani Nagar

Kalyani Nagar recorded a 9.4 per cent rental increase YoY in Q3 2018. The growing preference of IT/ITeS occupiers for this micro-market, can be attributed to its strategic location and its proximity to Kharadi and Hadapsar. Despite being a very small commercial micro-market, constituting merely four per cent of the overall stock in the city, it is able to command higher rents, as it is strategically located in close vicinity to residential hubs and talent pool.

“The persistent demand from the technology sector, should continue to drive leasing activity, while flexible workspace operators should further gain traction across cities. We expect rents to appreciate at a CAGR of two to four per cent over 2018-2021 in most cities, driven by premium buildings in strategic locations,” maintained Megha Maan, senior associate director, research, at Colliers International India.

Source: https://ecis2016.org/.
Copyright belongs to: ecis2016.org

Source: https://ecis2016.org
Category: Lifestyle