JLL – a financial and professional services firm, specializing in commercial real estate services, has recently revealed its research in the reign of Office property market . The report says the office property market continued to show rise in lease rentals, across the prominent cities, with Navi Mumbai recording the highest annual rental growth of 9.1% till March end.
Apart from Navi Mumbai, Bengaluru and Pune office markets have also witnessed 8.1% and 7.1% rental growth, respectively, during this period, showed the JLL India study.
The growth in Bengaluru and Pune’s office rentals is being ascribed to lower vacancy of 3.2% and 5.6%, respectively. The rise in rentals is indicative of a blunt demand for office space and commercial activity in these markets.
Realty developers in Bengaluru and Pune, in recent years, have not speculatively over built commercial complexes in these cities and this strategy is helping them to receive better rentals for existing prime assets. “The office market is expected to witness good demand over the next couple of years since India’s GDP growth, job creation, inflation and fiscal deficit are all in favorable condition. The only uncertainty is demand from software firms on account of automation and US visa policies. However, it will only have a limited impact because Indian software majors also have their own campuses,“ said Ashutosh Limaye, national director research, JLL India.
Despite the highest increase seen in Navi Mumbai, it has the most affordable average rent among all micro markets. It also has a growing footprint of grade A office developments and the micro market is slated to emerge as an IT and BFSI-backend corridor in the next few years.
According to property consultants, reasons including connectivity to both Mumbai and Pune, access to talent pools and residential catchments have been supporting the occupiers’ decision to set up offices, particularly of IT and IT-enabled services companies in Navi Mumbai.
While the annual increase in rentals was the highest in Navi Mumbai, gross average rents in Mumbai, including Thane and Navi Mumbai micro markets, rose by only 1%.
Within Mumbai, the western suburbs’ micro market registered a growth of 2.5% on average rentals, followed by secondary business district of Lower Parel at 2%, eastern suburbs at 1%, and Bandra-Kurla Complex at 1%. Rents in Central Business District of Nariman Point continued to slide and declined by 4% A further correction in Nariman Point average rent was attributed to limited supply of office space with latest amenities and existing rentals wanting to freshen up their offices or expand in the same location have been facing many restrictions.