Knight Frank today launched the second edition of its flagship global report ‘Global Cities – 2016.’ The report provides an outlook for real estate in 21 of the leading business cities and forecasts for the next five years. This time around, Bengaluru and Delhi are also a part of the analysis apart from Mumbai which was included last year.
The report says that in comparison with London and New York that offer rental yields at 4 per cent, Bengaluru, Mumbai and Delhi lead the pack with 10.5, 10 and 9 per cent respectively. Current office rentals in Mumbai and Delhi are lower than the 2007 peak levels by 17 and 19 per cent respectively. Bengaluru holds forte with an 8 per cent growth. Mumbai and Bengaluru feature among the list of top five global cites in terms of future rental growth – expected to grow to the tune of nearly 22 and 16 per cent respectively.
* The Delhi-Mumbai Industrial Corridor (DMIC) finds a place amongst the top five global infrastructure projects expected to create new business clusters and generate unprecedented employment opportunities.
* The Indian REIT sector is set to give a further push to commercial real estate; and could attract investments worth $100 bn in the next few years.
* While London and San Francisco witnessed the highest rental growth for high-rise offices (skyscrapers), Mumbai has also shown a healthy traction in high-rise rentals.
* 67% of investments in Indian real estate coming in from overseas is the highest among nations.
Healthy transactionShishir Baijal, CMD-Knight Frank India, said, “Indian office market has been maintaining the healthy traction of 2014 and has clocked office space transactions of 18 million sq. ft in the first six months of 2015 and we expect the year to complete at around 40 million sq. ft., which is the highest since 2011. This is a record year for Bengaluru which is expected to transact office space to the tune of around 12 million sq. ft in 2015. Even though at an aggregate level, the vacancy is at 17 % the challenge is to get good quality office spaces across prime business districts, wherein vacancy is in single digits. Due to a robust demand from start-ups and e-commerce, other than IT/ITeS, BFSI and manufacturing, office rentals are experiencing a substantial surge. We foresee demand to continue outstripping supply.”
InterestSamantak Das, Chief Economist & National Director of Research, Knight Frank India, said, “While Bengaluru, Mumbai and Delhi are offering the highest yields globally of 9-11%, we see a lot of interest from the investor’s fraternity. Rentals across Mumbai and Delhi are still below the 2007 peak levels, though Bengaluru is an outlier wherein rentals are 8% more. Currently these cities are facing an acute shortage of good quality office space on the face of robust demand, which is creating an upward pressure on office rentals that is expected to scale up in the coming years.”
