Knight Frank Asia-Pacific Prime Office Rental Index Q3 2019

Bengaluru CBD outperforms Asia-Pacific office market

Delhi’s CP & Mumbai’s BKC ranked 7^th& 11^th: Knight Frank

Bengaluru’s CBD sees highest 17.6% YoY growth in office rentals in Q3 2019

Connaught Place in Delhi sees 4.4% YoY rental growth; Bandra Kurla Complex in Mumbai records 2% rise

Knight Frank’s Asia-Pacific Prime Office Rental Index rises 1.8% YoY to 157.3

Of the 20 cities tracked by the index, 12 recorded either stable or increased quarterly rents; two less than the 14 reported in the previous period

India and Australia only two countries in Asia Pacific that saw rentals grow or stabilise on a quarterly basis in Q3 2019

Mumbai, November 25, 2019: Office market in India continues to be robust despite sluggish economic growth, with international property consultant Knight Frank in its recent report Asia-Pacific Prime Office Rental Index Q3 2019, showing that the Central Business District (CBD) of Bengaluru, comprising areas such as MG Road, Infantry Road and Residency Road, has registered the highest year-on-year rental growth in the Asia-Pacific region at 17.6% in July to September quarter this year (Q3 2019).

A resurgence in IT/ITeS sector hiring since the first half of 2019 (H1 2019) and increased activity by manufacturing companies kept demand buoyant in Bengaluru CBD. New and higher priced stock coming online in the CBD along with higher rentals being charged by renovated properties also caused rentals to rise.

Bengaluru was followed by the CBDs of Melbourne and Bangkok at the 2^nd and 3^rd ranks, with a YoY office rental growth of 15.5% and 9.4%, respectively.

The CBDs of Connaught Place in National Capital Region (NCR) and Bandra Kurla Complex (BKC) in Mumbai were the 7^th and 11^th fastest-growing prime office markets in the Asia-Pacific region, respectively, with a comparatively modest 4.4% and 2% YoY rental growth in Q3 2019.

In terms of rentals, Hong Kong, with a monthly rental value of USD 206.6 per sqm, was the most expensive office market in Asia-Pacific in Q3 2019, followed by Tokyo (USD 110.9 per sqm) and Singapore (USD 80.5per sqm).

The CBDs of NCR and Mumbai were ranked as the 5^th and 7^th most expensive prime office markets in Asia-Pacific, with monthly rental values of USD 51.8 per sqm and USD 46.2 per sqm, respectively. 

KNIGHT FRANK ASIA-PACIFIC PRIME OFFICE RENTAL INDEX Q3 2019

Rank	City	Submarket(s)	12-month % change(Q3 2018–Q3 2019)	Rent(USD/sqm/month)	Forecast for next 12 months
1	Bengaluru	CBD	17.6	20.5	Increase
2	Melbourne	CBD	15.5	39.1	Increase
3	Bangkok	CBD	9.4	36.9	Same
4	Manila	Various	7.5	21.1	Decrease
5	Sydney	CBD	6.4	65.6	Increase
6	Singapore	Raffles Place, Marina Bay	4.5	80.5	Same
7	NCR	Connaught Place	4.4	51.8	Same
8	Perth	CBD	3.4	34.3	Increase
9	Brisbane	CBD	3.0	34.5	Increase
10	Taipei	Downtown	2.2	27.2	Increase
11	Mumbai	BKC	2.0	46.2	Increase
12	Tokyo	Central 5 Wards	1.6	110.9	Same
13	Kuala Lumpur	City Centre	1.5	15.2	Decrease
14	Guangzhou	CBD	1.4	27.0	Same
15	Seoul	CBD, GBD, YBD	0.5	28.2	Same
16	Phnom Penh	City Centre	0.5	23.6	Same
17	Shanghai	Puxi, Pudong	-2.1	39.6	Decrease
18	Beijing	Various	-4.7	50.3	Decrease
19	Hong Kong	Central	-8.3	206.6	Decrease
20	Jakarta	CBD	-10.8	24.7	Same

Source: Knight Frank Research / *Sanko Estate

India and Australia were the only two countries that saw rentals grow or stabilise across prime office markets on a quarterly basis in Q3 2019.

Knight Frank’s Asia-Pacific Prime Office Rental Index, which tracks office rental levels of 20 frontline cities across the Asia-Pacific region, rose 0.1% quarter-on-quarter to 157.3 in Q3 2019. Year-on- year, the index rose 1.8%, decelerating from the 3.4% rise witnessed in Q2 2019.

Of the 20 cities tracked by the index, 12 recorded either stable or increased quarterly rents; 3 less than the 14 reported in the previous period. “The office market has been witnessing a steady growth in India, which is adequately reflected in the growth in rental values in prime office markets. Bengaluru, in particular, has seen continued growth in leasing activities, due to the competitive pricing offered by its CBD, as against its counterparts in New Delhi and Mumbai. Bengaluru CBD sees continuous demand, which in turn has pushed the rental values upwards. CBD in New Delhi continues to remain attractive, however, low vacancies and lack of Grade-A supply have restricted leasing volumes in this location. Mumbai CBD, on the other hand, continues to be one of the most favourable office destination commanding high rental values. We expect the trend to continue for these markets as the demand for office space is expected to continue,” said Shishir Baijal, Chairman and Managing Director of Knight Frank India.