Bengaluru becomes Asia-Pacific’s fastest-growing office market in Q3: Report – real estate

Bengaluru’s commercial business district (CBD) was the best performing office space market in the Asia Pacific region in the third quarter of calendar year 2019, posting rental growth of 17.6%, according to international property consultant Knight Frank.

The CBDs of Connaught Place in National Capital Region (NCR) and Bandra Kurla Complex in Mumbai were the seventh and 11th fastest-growing prime office markets in the Asia-Pacific region, respectively, with 4.4% and 2% year-on-year rental growth in Q3 2019, as per Knight Frank Asia-Pacific Prime Office Rental Index Q3 2019.

“Office markets in cities like Bengaluru, Mumbai and NCR continue to enjoy healthy rental growth, despite the weaker economic sentiment in 2019, mainly due to the rapid expansion witnessed in IT industry,” said Shishir Baijal, chairman and managing director of Knight Frank India.

He added: “Multinationals continued to expand robustly, especially in Bengaluru because of availability of the right talent pool and new office assets at comparatively low rents. We expect the trend to continue for these markets as the demand for office space is expected to grow in 2020 as well.”

As far as 2020 is concerned, Knight Frank’s ‘Asia-Pacific Outlook Report 2020’ said that office space rentals are further set to increase in the Central Business Districts (CBDs) of Bengaluru and Mumbai in 2020, while the rental growth in the CBD of National Capital Region (NCR) is expected to remain stable.

The CBD of Bengaluru — comprising areas such as MG Road, Infantry Road and Residency Road — is expected to see more supply coming in 2020, while the demand is expected to remain steady as the IT sector continues to expand, said the report.

For the overall Asia-Pacific region, Grade-A office rents are expected to fall 0-3% in the year 2020 compared with a 0.6% rise in the first nine months of 2019 as occupier demand continues to soften, according to the report.

It added that Australia will continue to provide investors with attractive investment propositions, given its higher yields relative to other developed markets. In 2020, Australian commercial and industrial real estate is expected to see another year of double-digit total returns with capital growth accelerating in response to lower interest rates.