JOIN USBengaluru among top 5 cities in APAC to see a strong single-digit decline in office rentals
Bengaluru has been ranked among the top five global cities in the Asia Pacific region that witnessed a strong single-digit decline in office rental values since the beginning of the Covid-19 pandemic in March 2020.
In Bengaluru’s central business district, comprising areas such as MG Road, Residency Road and Infantry Road among others the monthly rentals have declined 8% year-on-year to Rs 124 per sq. feet per month at the end of March quarter.
At the end of the March quarter last year, average office rentals stood at Rs 130 to Rs 141 per sq. feet in these locations, according to data shared by the property consultant Knight Frank India.
Among other global cities, Hong Kong has seen a double-digit decline of 13.7% in office rentals, while Singapore, Jakarta, and Tokyo have witnessed a decline of 9%, 8.4%, and 8.2% respectively during the March quarter. Mumbai and NCR are other Indian cities to witness a decline of 6.2% and 1% respectively, according to Knight Frank’s latest report Asia-Pacific Prime Office Rental Index Q1 2021.
With the ongoing second Covid-19 wave, the recovery in demand for office space is likely to be delayed further, said Shantanu Mazumder, Senior Branch Director (Bengaluru), Knight Frank India.
“There is no eagerness among the employers nor their workers to return to work in offices. Unlike last year, there is no urgency for resuming work at physical offices with the second Covid wave causing huge fear across the country,” he said.
The report cited that despite uncertainty around the performance of India’s office sector, Bengaluru, NCR, and Mumbai markets are expected to remain stable in rental values over the next 12-months.
However, on a quarter-on-quarter basis, the CBD areas of Bengaluru have registered a decline of 3% in Q1 of 2021 compared to a 4% decline recorded in Q4 of 2020.
Knight Frank forecasts that the decline in rents to decelerate this year, with overall rents expected to decline by 3% in the APAC region, compared to the 4.8% decline seen in 2020.
According to the index, Taipei is the only city expected to witness an increase in office rental values across the APAC region in the next 12-months. Of the 22 cities tracked by the index, 8 recorded either stable or increased rents in the past quarter compared to 10 in the previous quarter.
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.”