The prime office space rentals in the key cities of Delhi-NCR, Mumbai, and Bengaluru are expected to remain stable over the next 12-months despite the ongoing Covid crisis, according to a Knight Frank report.
The ‘Asia-Pacific Prime Office Rental Index Q1 2021’ said that Bandra Kurla Complex (BKC) in Mumbai witnessed a meaningful recovery in office rents to 0.8 per cent QoQ during the January-March 2021 quarter, compared to -5.5 per cent in the previous quarter.
This robust recovery can be attributed to improved transaction activity in the Q1, 2021 period, it said.
Knight Frank forecasts that the decline in rents will decelerate this year, with overall rents expected to decline by 3 per cent in the APAC region, compared to the 4.8 per cent decline seen in 2020.
Central Business District (CBD) of Bengaluru, comprising areas such as MG Road, Infantry Road, and Residency Road, has registered a decline of 3.0 per cent QoQ in Q1, 2021 against a decline of 4.0 per cent in Q4 2020.
In Connaught Place in National Capital Region (NCR), office rents saw a flat 0.0 per cent QoQ price change in Q1, 2021 compared to -1.0 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 APAC region in next 12 months. Of the 22 cities tracked by the index, eight recorded either stable or increased rents in the past quarter compared to 10 in the previous quarter.
For Q1, 2021, Knight Frank’s AsiaPacific Prime Office Rental Index fell -1.2 per cent quarter-on-quarter, led by large office markets such as Tokyo, Hong Kong, and Bengaluru recorded rental decline between -3.0 per cent and -2.8 per cent during the same period. On an annual basis, the overall index was down -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 in the country,” Baijal said.