A s the office demand continued to intensify in the second quarter (Q2) of 2017, an upward pressure on rental values was observed in a few micro-markets across India.
A high rental growth was seen mostly in cities like Bengaluru, Chennai and Hyderabad where the year-on-year (y-o-y) change ranged between 8-17% at some locations.
In the first quarter of 2017, Bengaluru and Hyderabad both witnessed single digit vacancy levels hovering between 8-9% due to a dearth of quality Grade A stock thus leading to increased rental values in certain micro-markets.
In 2016, a few Pune micro markets witnessed a y-o-y rental growth of up to 19%. Although the supply woes continue across Pune, rental values have stabilised in Q2 2017, after a considerable increase in 2016.
Bengaluru – CBD
This micro-market has always been the first preference of BFSI and IT occupiers primarily due to its connectivity features and prime location.
In spite of having limited availability of office spaces and supply, the area has witnessed 17% y-o-y rental appreciation.
Chennai – Off CBD
Predominantly an IT market, the area has observed 13% y-o-y rental growth. Apart from IT and BFSI, consulting companies have their setup at Guindy, MRC Nagar and Saligramam. In Q2 2017, this micro-market accounted for 16% of total absorption.
Gurugram – DLF Cyber City (IT)
An iconic commercial hub in Gurugram, it is the top preference for domestic and international occupiers. Due to superior infrastructure and quality office spaces, DLF Cyber City has witnessed 12% y-o-y rental growth. The micro-market holds 9% share in the total office space absorption in Q2 2017.
Pune – Hadapsar/Fursungi
The Hadapsar market is emerging due to some notifying projects such as Magarpatta city and other projects offering large floor spaces. This area is predominantly an IT/ITeS market with residential localities in the nearby catchment area. Hadapsar market has observed 10.2% y-o-y rental growth.
Pune – Kharadi
Kharadi is one of the fastest growing commercial micro-markets and is rising as an IT hub. In the past few years, the area has seen good projects like EON IT Park which is one of the largest IT Park in Pune. It will also witness significant amount of office spaces in the next three years. Rents have increased by 10.1% y-o-y.
Bengaluru – EPIP/Whitefield
The commercial micro-market in EPIP/Whitefield has ample availability of large floor spaces, which is why Grade A developments are attracting occupiers to consolidate their operations here. This location in the eastern Bengaluru has witnessed rental growth of 10% y-o-y.
Hyderabad – SBD
The SBD market in Hyderabad has prominent locations such as HiTECH City, Madhapur, Gachibowli and financial district. In Q2 2017, 89% of total leasing volume was concentrated in SBD due to superior amenities and reasonable rentals compared to other cities. Rents in SBD grew by 10% y-o-y.
Bengaluru – Electronic City
One of the preferred micro-markets in Bengaluru with comparatively cheaper rents than other markets in the city. The area offers large floor spaces and superior quality office spaces, and grew by an average of 9% y-o-y.
Chennai – OMR Post Toll
The increasing popularity of the OMR post-toll micro-market has shifted the focus of occupiers to this market and witnessed gross leasing of 33% of total absorption in Q2 2017.
This area includes locations like Navalur, Sholinganallur and Pallavaram-Thoraipakkam Road, popularly known as the IT corridor, and has observed 8% y-o-y rental growth.
Bengaluru – Hosur Road
Hosur road is an emerging IT/ITeS micro-market in Bengaluru with cheaper rates mainly due to its location. It’s located in the peripheral area of the city and has the potential to develop large projects due to ample land availability. The market has witnessed 8% y-o-y average rental growth.
Colliers International is a global real estate
services company
