Delhi's CP 4th most expensive office market in the world

New Delhi’s Connaught Place (CP) emerged as the world’s fourth most expensive office location in 2012, moving up by a notch, in a global study conducted by Cushman & Wakefield. West End Area (London) tops the list, followed by Central Business District (CBD) in Hong Kong and Zona Sul (Rio de Janeiro, Brazil).

Connaught Place registered a growth of about 25% in yearly rental values over the last year to an average Rs.403 per sq. ft per month. The limited supply of quality office space in the area is one factor pushing up rentals.

The location remains high on priority for sectors such as banking, financial services and insurance, consulting, trade, and media, according to the report.

On the other hand, Mumbai’s Bandra Kurla Complex (BKC) was ranked the eighth most-expensive in the Asia-Pacific region, according to the report.

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London and Hong Kong swapped positions in 2012, as they had occupied the second and first slot, respectively, in 2011. Rio de Janeiro displaced Tokyo’s CBD to the fifth position and occupied the third position in 2012.

[caption id=“attachment_633816” align=“alignleft” width=“380”] New Delhi’s Connaught Place is the world’s fourth-most expensive office location, ahead even of Tokyo and New York, according to an annual survey by global real estate consultant Cushman and Wakefield.[/caption]

“India’s corporate office space has been limited, with the majority of development being in the information technology/enabled services space. Therefore, locations that offer corporate office space such as CBD, off-CBD, and select micro markets in the suburban districts have witnessed high rental values. Demand for corporate office locations have remained buoyant, especially from sectors such as banking, financial services and insurance (BFSI), engineering and consulting firms, media and entertainment, amongst others leading to an increase in rental values for these locations,” said Cushman & Wakefield’s South Asia Executive Managing Director Sanjay Dutt.

The global markets and the Indian office markets have been affected negatively by the economic slowdown in European and American continent. There was a 23 percent decline in absorption in 2012 in India, added Dutt.

Because of its proximity to establishments including government organisations, trading centres and retail location, demand for quality office space has been high in the area. It is also a top priority for sectors such as BFSI, consulting, trade and media. The fresh supply in CP has come up owing to redevelopments and renovations of existing buildings, which have been commanding a premium and becoming instrumental in pushing average rental values upwards.

The rental values of this location will remain high. However, limited activities in the location on an ongoing basis are expected to keep values contained, notwithstanding the fact that location may have already reached peak pricing," said Dutt.

In the Asia-Pacific, New Delhi, Chennai and Bangalore occupied second, third and fifth slot for cities with largest rental growth. CP recorded a rental growth of 25 per cent with $162 sq. ft per year, CBD in Chennai recorded a growth of 13 per cent with $27 sq ft per year and CBD in Bangalore a growth of eight per cent $35 sq ft per year. The first slot was occupied by CBD in Jakarta, Indonesia, with a rental growth of 46 per cent at $55 sq ft per year, while the fourth slot was taken by Futian, Shenzhen (China) with a rental growth of 11 per cent at $60 sq ft per year.

Globally, prime offices building rent rose by 3 per cent, the report said. South America, particularly Brazil and Colombia, accounted for much of that growth, while many markets suffered under continuing economic uncertainty.

“Safe havens or gateway cities such as London, Hong Kong and New York continue to command high rents despite uncertain economic conditions, as they remain key markets in which to do business; while burgeoning population growth has led to rising occupancy costs in emerging markets in South America and Asia,” said Glenn Rufrano, president and chief executive, Cushman & Wakefield.

Agencies