Despite uncertainty around India`s office sector, Bengaluru, NCR and Mumbai markets are expected to remain stable in rental values over the next 12 months, international property consultancy Knight Frank said on Wednesday.
According to its latest report Asia Pacific Prime Office Rental Index Q1 2021, Bandra Kurla Complex (BKC) in Mumbai witnessed a meaningful recovery in office rents to negative 0.8 per cent QoQ during January to March quarter compared to negative 5.5 per cent in the previous quarter. The robust recovery can be attributed to improved transaction activity.
Knight Frank forecasts the decline in rents to decelerate this year with overall rents expected to decline by 3 per cent in the Asia Pacific region compared to the 4.8 per cent decline seen in 2020.
The central business district of Bengaluru comprising areas like MG Road, Infantry Road and Residency Road registered a decline of 3 per cent QoQ in Q1 2021 against a decline of 4 per cent in Q4 2020. Connaught Place in National Capital Region (NCR) office rents saw a flat price change in Q1 2021 compared to a negative 1 per cent in Q4 2020.
According to the index, Taipei is the only city expected to witness an increase in office rental values across the A-Pac region in the next 12 months. Of the 22 cities tracked by the index, 8 recorded either stable or increased rents in the past quarter compared to 10 in the previous quarter. For Q1 2021, Knight Frank`s Asia Pacific Prime Office Rental Index fell negative 1.2 per cent quarter-on-quarter led by large office markets like Tokyo, Hong Kong and Bengaluru recorded rental decline between negative 3 to negative 2.8 per cent during the same period. On an annual basis, the overall index was down negative 5.5 per cent year-on-year.
Shishir Baijal, Chairman and Managing Director of Knight Frank India, said the second wave of pandemic and associated regional lockdowns have temporarily delayed occupiers` office re-occupancy plans.However, control on infection case count with graded regional lockdowns and progress on vaccination drive will act as a market stabiliser in near future.
“Given the strong fundamentals of India office market, despite the near-term uncertainty, occupiers will positively react to any improvement in the pandemic scenario,” he said.