Bengaluru, Chennai and Gurugram are among the top 10 office property markets of the country which have witnessed the highest rental growth this year. For instance, while the Bengaluru CBD (Central Business District) micromarket has witnessed a YoY rental appreciation of 17%, the Chennai office CBD micromarket has observed a 13% YoY rental growth and the DLF Cyber City in Gurugram has witnessed a growth of 12%.
As per Colliers Research, as the office demand continued to intensify in the quarter 2 (Q2) of 2017, an upward pressure on rental values was observed in a few micromarkets across the country. A high rental growth was seen mostly in South cities like Bengaluru, Chennai and Hyderabad where YoY change ranged between 8% and17% at some locations. In H1 2017, Bengaluru and Hyderabad both witnessed single-digit vacancy levels hovering between 8 and 9% due to a dearth of quality Grade A stock, thus leading to increased rental values in some micromarkets.
Some micromarkets of Pune registered YoY rental growth of up to 19% in 2016. Although the supply woes continue across these micromarkets, rental values – after a considerable increase in 2016 – have stabilised in the quarter 2 of this year.
Here we are taking a look at the top 10 office micromarkets that have witnessed the highest rental growth this year:
1. Bengaluru – CBD
According to Colliers Research, the Central Business District micromarket of Bengaluru has always been the first preference of BFSI and IT occupiers, owing to its prime location and connectivity. Therefore, despite having limited availability of office spaces and supply, this micromarket has witnessed a YoY rental appreciation of 17%.
2. Chennai – Office CBD
The Chennai office CBD micromarket, which is predominantly an IT market, have observed 13% YoY rental growth. Apart from IT and BFSI, consulting companies have their setup in Guindy, MRC Nagar and Saligramam. In Q2 2017, this micromarket accounted for 16% of total absorption.
3. Gurugram – DLF Cyber City
The DLF Cyber City in Gurugram is an iconic and landmark commercial hub and is the top preference of domestic and international occupiers. Due to superior infrastructure and quality office spaces, the DLF Cyber City has witnessed 12% YoY rental growth. The micromarket holds 9% share in the total office space absorption in Q2 2017.
4. Pune – Hadapsar/Fursungi
Pune’s Hadapsar market is emerging owing to some notifying projects such as Magarpatta city and other projects offering large floor spaces. This micromarket is predominantly an IT/ITeS market with residential localities in the nearby catchment area. The Hadapsar market has observed a 10.2% YoY rental growth.
5. Pune – Kharadi
Kharadi is one of the fastest-growing commercial micromarkets and is rising as an IT hub. In the past few years, it has seen good projects like EON IT Park which is one of the largest IT parks in Pune. It is also likely to witness a significant amount of office spaces in the next three years. Rents in this micromarket have increased 10.1% YoY.
6. Bengaluru – EPIP/Whitefield
The commercial micromarket in EPIP/Whitefield has ample availability of large floor spaces and Grade A developments are attracting occupiers to consolidate their operations in this micromarket. The micromarket in the eastern Bengaluru has witnessed a rental growth of 10% YoY.
7. 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% YoY.
8. Bengaluru – Electronic City
This is one of the preferred micromarkets in Bengaluru with comparatively cheaper rents than other markets of the city, offering large floor spaces and superior quality office spaces which grew by an average of 9% YoY.
9. Chennai – OMR Post Toll
Increasing popularity of OMR Post Toll micromarket has shifted occupiers focus to this market and witnessed gross leasing of 33% of total absorption in Q2 2017. This micromarket includes locations like Navalur, Sholinganallur and Pallavaram-Thoraipakkam Road, which is popularly known as IT corridor of Chennai, and has observed 8% YoY rental growth.
10. Bengaluru – Hosur Road
The Hosur Road is an emerging IT/ITeS micromarket in Bengaluru with cheaper rates mainly owing to its location. This micromarket is located in the peripheral area of the city and has the potential to develop large projects due to ample land availability. This market has witnessed 8% YoY average rental growth.