MUMBAI: Office space rentals in the country’s commercial capital are expected to grow 11.1%, surpassing the growth rate in London by 2019. The government’s renewed emphasis on infrastructure development in Mumbai, along with economic growth, is likely to bolster the office space market here.
International finance centres such as London, Tokyo and Hong Kong are estimated to post a 4.5-10.3% rise in office rentals during the same period, according to a Knight Frank report.Even during the second quarter ended June, Mumbai, along with Moscow, recorded the highest rental yield of 10% each among the top 30 global cities.Other Indian metros –Bengaluru and Delhi –also recorded around 10% rental yield in this period.
Surprisingly , Singapore, Asia-Pacific region’s most prime business city , is expected to witness a 14% drop in office rentals. Beijing and New York are other global financial centres that are likely to decline until 2019.
Mumbai ranks 11th in prime rental forecast ahead of London, which is projected to grow at 7.1% between 2015 and 2019, showed the Knight Frank Global Cities report.
“Mumbai is expected to gain due to the government’s emphasis on infrastructure building. This, along with reforms-led growth, would boost the office market in Mumbai. Further, the new Development Plan 2034 has proposed to give a special focus to support commercial real estate, which will significantly attract investments in office space markets. In terms of office rental yields, Indian cities are extremely attractive, with Bengaluru, Mumbai and Delhi featuring among the top 5 global cities,” said Samantak Das, national director, reasearch, Knight Frank India.
With a space-starved peninsular geography, increased infrastructure development appears the best solution to augment the supply of affordable real estate and sustain the city’s growth. Accordingly, unprecedented investment is now committed to Mumbai’s infrastructure, with a target to complete the projects within a given time-frame. Among key infrastructure projects, the upcoming $2.6-billion Mumbai Trans Harbour Link is a 22-km, six lane sea-bridge connecting Mumbai to its satellite city, Navi Mumbai.
Similarly , the 36-km Coastal Road, running along the city’s coastline, will be a first of its kind controlled access highway providing high-speed connectivity between North-South corridors of the city . Both projects are scheduled to be completed by 2019.
Among other Indian cities, Bengaluru has surpassed several global cities and has emerged as a preferred innovation hub, because of its strong startup ecosystem. India’s Silicon Valley has remained the most sought-after and competitive destinations for a tech startup to set up an office. The city offers the lowest office costs when compared with other global tech startup locations such as Amsterdam, Melbourne and Austin, among others.
In the North, Delhi-National Capital Region (NCR) is poised to benefit from opportunities across the logistics value chain.
Credits ET Realty