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Mumbai:Knight Frank, a leading international property consultancy, in its latest report on‘Asia – Pacific Outlook 2023’cited that rent growth in the APAC region is expected to moderate in 2023 as occupiers seek tooptimise overheads and generate savings.Key drivers of leasing demand will continue to stem from professional services, finance and co-working sectors, with the inclusion of flight-to-quality requirements.

While the market balance is tilted toward the tenant across the APAC region, it remains balanced in the Indian markets. The steady performance of the Indian office markets seen in 2022 is expected to sustain in 2023. Bengaluru’s prime office rental is expected to grow in the range of 5%-7% YoY in 2023, highest amongst the 24APAC cities tracked in the report. Mumbai and New Delhi are the other Indian cities tracked in the report. According to the report, New Delhi’s prime office rental is expected to grow in the range of 4%-6% YoY followed by Mumbai in the 3%-5% YoY in 2023. A comparatively strong economic outlook, potentially increased outsourcing from the west due to cost constraints, depreciating rupee making Indian offices cheaper are expected to drive rents in India in 2023.

For the APAC region, key drivers of leasing demand will continue to stem from professional services, finance, and co-working sectors, with the inclusion of flight-to-quality requirements. A rapid expansion of co-working footprint in CBDs in line with the shift in preference for flexibility by space users has been observed across the region.

Considerations for ESG will take on a more prominent role in the office market as companies inch a year closer to their 2030 sustainability targets. Based on Knight Frank’s preliminary study, there will be a 22% growth in green buildings from 2022 to 2023 and 42% of the entire office inventory in the APAC region will be green by 2030.

Sharing a perspective on the growing commercial market in India, Mr. Shishir Baijal – Chairman and Managing Director at Knight Frank India said, “While recessionary forces in the west weigh on the global economy, the APAC region and India are expected to remain beacons of growth in an otherwise uninspiring economic backdrop. Indian occupier activity is being driven by a comparatively strong economic outlook and will be especially sensitive to cues from GDP growth and inflation over the next few quarters.”

Tim Armstrong, Global Head of Occupier Strategy and Solutions at Knight Frank said, “We are seeing delayed decision-making as relocation costs rise, shifting the priorities of businesses to safeguard their bottom lines and reduce unnecessary spending. Occupiers should also evaluate the amount of office space required to minimise OPEX”

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