Chennai: Bengaluru saw the highest growth in prime office rental values in the first quarter of 2022 across the Asia-Pacific region.
As per Knight Frank’s Asia-Pacific Prime Office Rental Index for Q1 2022, Bengaluru was the best performing market with growth of 5.8 per cent compared to the previous quarter. Seoul stood second in rental performance on a quarterly basis and first on a year-on-year basis. Bengaluru occupied the second slot with a growth of 3.6 per cent in the Q4 when compared to the year ago quarter.
The current occupancy cost for prime office in Bengaluru was stated to be $26.7/square feet per year. With the change in the pandemic protocols, more and more companies are calling back their employees, resulting in transaction activities.
New completions have been deliberately kept low, keeping the values intact in the city.
The city is expected to see an upward trend in its rental value over the next 12 months. Bengaluru currently has an office inventory of 17.5 million sq metre with a vacancy level of 12.6 per cent. The prime office market of Delhi-NCR witnessed no change in rental values in Q1 2022 over the previous quarter, however recording an annual rental value growth of 1 per cent in Q1 2022.
The market of Mumbai witnessed a de-growth of 1.9 per cent in Q1 2022 on an annual comparison. The rental values remained stable over the previous quarter in Q1 2022.
The APAC regional index registered an increase of 0.8 per cent quarter-on-quarter. Of the 23 cities tracked by the index, 21 cities recorded stable or increasing rents in Q1 2022, as compared to 13 in the previous quarter.
The growth should be viewed against the turbulent Q1 with accelerating inflation and the Russian invasion of Ukraine weighing down on market sentiment. “The Indian office market scenario has started to improve since the removal of Covid related restrictions. More companies are recalling their staff to the office. Further, with the IT/ ITeS sector hiring upwards of 20 per cent new staff in the last 18 – 24 months, demand for office space is expected to rise further,” said Shishir Baijal, chairman and MD, Knight Frank India.