Bengaluru has recorded the highest annual office rental growth in the APAC region in Q2 2022 at 12.1%, followed by Mumbai at 7% YoY.

Asia-Pacific’s prime office rents remained resilient in Q2 despite rising inflation. While Hong Kong SAR continues to be Asia’s most expensive office market with an annual rent of US$ 175.4 per sq ft a year, Delhi-NCR remains the most expensive prime office market in India and 10th most expensive commercial real estate market in the APAC region, as per Knight Frank Asia-Pacific Prime Office Rental Index Q2 2022. The annual prime headline rent of commercial office space in the city was recorded at US$ 51.6/sqft/year.

In terms of annual growth, Bengaluru witnessed the highest prime office rental percentage increase of 12.1% YoY in Q2 2022. Mumbai achieved the highest quarterly change at 7% in its prime office rental value. The APAC office rental index registered a growth of 1.0% quarter-on-quarter (QoQ), after gaining for two consecutive quarters.

The overall index is up by 2.0% year-on-year. Of the 23 cities tracked by Knight Frank’s Asia-Pacific Prime Office Rental Index, 17 cities recorded stable or increasing rents in Q2 2022, as compared to 21 in the previous quarter.

Commenting on the same, Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “As the economy stabilises post pandemic, there is a rise in new hiring across most industries along with a move towards return to office which is propelling demand for offices in India. The Indian office market witnessed strong leasing trend that continued into Q2 2022 with Bengaluru leading in transaction volumes. With its unique position, India can expect its key driving sectors such as IT/ ITeS to continue to grow despite global headwinds.”

Key highlights of the performance of key Indian cities:

Bengaluru

With an increase of 12.1% YoY, Bengaluru was the best-performing prime office market in the APAC region in terms of rental growth in Q2 2022 as compared to the last year. The rental value in the city is projected to rise during the following 12 months. With the 22nd position on APAC Prime Office Rental Index, the city finds itself as one of the least expensive prime office markets in APAC region. The prime office rent of the city was recorded at INR 1,620/sqft/year.

Mumbai

The prime office rent of the city was recorded at INR 3,622/sqft/year and was the 11th most expensive commercial market in the APAC region. The prime office market of the city grew 7% YoY after three quarters of stagnation. The rental value is expected to increase over the next 12 months.

Delhi-NCR

The prime office market of Delhi-NCR continues to see rental values maintain levels seen in the past four quarters. However, the rental value is expected to increase over the next 12 months as transaction volumes are expected to pick up going forward. The prime office rent of the city was recorded at INR 4,078/sqft/year.

APAC Prime Office Rent, location – Rank by Occupancy cost (US$/ Sqft/ Yr)

Sharing an overview of the prime office performance in the APAC region, Tim Armstrong, Global Head, Occupier Strategy and Solutions, Knight Frank, said, “As we move into H2 2022, we expect utilization rates to increase as office re-occupancy rates continue to nudge upwards. While hybrid working is here to stay, adoption in the region will likely be more gradual with most occupiers expected to embrace an office-first approach; work culture in most of the region will also tend to tilt strategies towards those that continue to emphasize the importance of the centralized office. As occupiers orient and pilot workspace design around such strategies, it will facilitate, and consequently, bolster a return to the office.”

“APAC is still in a relatively good position to handle the volatility in the short term despite the multiple headwinds in the macro-environment. Leasing momentum is expected to remain more resilient as economies recover from the pandemic. However, should inflation stay elevated and central banks’ tightening continue to outpace growth, the post-pandemic recovery could weaken, and occupiers may take a wait-and-see attitude towards lease commitments,” he added.

https://www.financialexpress.com/money/delhi-ncr-10th-most-expensive-commercial-realty-market-in-apac-region-knight-frank/2606710/