Bengaluru, Mumbai and Delhi top the Global Commercial Real Estate Market!
The recent research on commercial real estate market in India has revealed that, top cities in India like Mumbai, Bengaluru and Delhi have topped the global commercial real estate market in terms of annual rental yields. These markets have reportedly outperformed all the global business hotspots with the annual returns of 9.5% - 10.5%, and this is mainly because of the growing lease market and the demand for commercial properties.
According to a global survey conducted by Knight Frank, a leading property consultant, Bengaluru topped the list of cities doing well in the commercial real estate market with the annual yield of about 10.5%. And, the cities like Singapore, New York, Hong Kong and Tokyo stand with the annual yield ranging from 2.9% - 7% at the best. Bengaluru and Mumbai are also featured among the top 5 global cities to have good rental growth in future and are expected to grow up to 16% and 22% respectively.
Record Office Space Transactions in 2015
Office space market in India seems to have been maintaining a healthy traction since 2014 and has registered the office space transactions of 18 million sq. ft. in the first six months of 2015, and the transactions by the end of the year has reached 40.21 million sq. ft. which is the highest since 2011. 2015 has been a record year for Bengaluru; it has registered the transactions of 13 million sq. ft. in the year.
The rentals across Mumbai and Delhi are still less when compared to the peak levels of 2007, but Bengaluru stands as an outlier where the rentals are 8% more. These cities are currently facing an acute shortage of quality spaces, and this is what has created an upward pressure on office rentals; it’s expected to scale up in the range of 6-7% in the next six months, said the national director of research, Knight Frank India.
Even though the aggregate vacancy level is at 17%, the investors and occupiers are still facing the difficulties of getting a quality space across the prime business districts. Because of the robust demand from IT/ITes, ecommerce companies and start-ups, the office rentals are seeing a substantial surge; it’s also expected that the demand continues to outstrip supply.
Mumbai and Bengaluru have been in the leading positions with the larger transactions. Recently, Tata Consultancy Services (TCS) signed an agreement of leasing more than 2 million sq. ft. space under a single roof at Hiranandani Estate in Thane, which is said to be the biggest office space transaction in India in terms of area.
Being in dump for over three years, commercial real estate market seems to be back on track, with a few decent deals and a health pipeline indicating the signs of recovery. Several big investors like GIC and Blackstone have been investing on the commercial properties for some time, and the big occupiers are also returning to the market which is hinting at improved business demand and the need for expansion.