Delhi-NCR is the 10th most-expensive commercial real estate market in the Asia-Pacific (APAC) region, according to Knight Frank’s Asia-Pacific Prime Office Rental Index for Q2 2022. The annual prime headline rent of commercial office space in the city was recorded at $51.6 (Rs 4,078) per square feet a year.
Hong Kong SAR continued to be Asia’s most expensive office market with an annual rent of $175.4/sqft per year, according to Knight Frank. It added that Bengaluru recorded the highest annual office rental growth in the APAC region in the June 2022 quarter at 12.1 per cent, followed by Mumbai at 7 per cent year-on-year.
The APAC office rental index registered a growth of 1 per cent quarter-on-quarter (q-o-q), after gaining for two consecutive quarters. The overall index is up by 2 per cent 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 the second quarter of the calendar year 2022, as compared to 21 in the previous quarter.
Shishir Baijal, chairman and managing director of Knight Frank India, said, “As the economy stabilises after the pandemic, there is a rise in new hiring across most industries along with a move towards a return to the office, which is propelling demand for offices in India. The Indian office market witnessed a 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.”
Bengaluru, with an increase of 12.1 per cent year-on-year, 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 Rs 1,620/sqft/year.
In Mumbai, the prime office rent was recorded at Rs 3,622 per sq ft per year and it was the 11th most expensive commercial market in the APAC region. The prime office market of the city grew 7 per cent y-o-y after three quarters of stagnation. The rental value is expected to increase over the next 12 months.
Tim Armstrong, global head (occupier strategy and solutions) at Knight Frank, said, “As we move into H2 2022, we expect utilisation 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 emphasise the importance of the centralised office.”
He added that 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.”