Only Bengaluru office market among top cities that may see rents go up

Low vacancies in Bengaluru will enable city absorb much of the upcoming supply
Bengaluru is the only office market among the top cities in the country that is expected to see rise in rents next year. Mumbai and the Delhi-National Capital Region (NCR) are expected to remain stable in rental values, according to a report by Knight Frank.


“For the main office markets of the country, the positive trends are a draw-out of the encouragement received in the subsequent part of 2020 (July–September), which saw office space demand making a comeback, albeit still short of pre-Covid periods,” the report stated.


“Bengaluru, in particular, has the benefit of existing low vacancies that will enable absorption of much of the upcoming supply. The city also has the advantage of relatively lower rentals, compared to global markets, and a large talent pool, that should help in quicker revival of this market as global economies move towards normalcy,” it stated.


According to the report, Asia Pacific (APAC) prime office rents are expected to decline by up to minus 3 per cent in 2021. In terms of APAC Capital market forecast, commercial yields for Mumbai, Delhi-NCR, and Bengaluru, under office and warehousing segment, are expected to remain stable in 2021.


In the APAC region, industrial investment share of commercial transaction volumes increased by 50 per cent in 2020, and is expected to continue to do well in 2021 as investors continue to jump on the e-commerce bandwagon.


The demand for warehousing remained relatively resilient this year, correcting by 11 per cent year-on-year, compared to 44 per cent compound annual growth rate recorded between 2016-17 and 2019-20. Despite Covid-19, the Indian warehousing sector is expected to remain comparatively less impacted due to rising e-commerce demand, according to the report.

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