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Asia-Pacific prime office rents remain resilient in Q2 despite rising inflation

Bengaluru recorded the highest annual office rental growth in the APAC region in Q2 2022 at 12.1%, followed by Mumbai at 7% YoY: Knight Frank

Asia-Pacific Prime Office Rental Index Q2 2022

* Delhi-NCR is the most expensive prime office market in India; ranks 10th in the APAC region

* Mumbai’s prime office rental market achieves the highest sequential growth

Mumbai, 26^th July, 2022: Knight Frank, in its recent edition of the Asia-Pacific Prime Office Rental Index for Q2 2022 noted Delhi-NCR as the 10^th most expensive commercial real estate market in the APAC region. The annual prime headline rent of commercial office space in the city was recorded at US$ 51.6/sqft/year). Hong Kong SAR continued to be Asia’s most expensive office market with an annual rent of US$ 175.4/sqft/year.

In terms of annual growth, Bengaluru witnessed the highest prime office rental percentage increase of 12.1% YoY in Q2 2022. Mumbai achieved the highest quarterly change at 7% in its prime office rental value.  The APAC office rental index registered a growth of 1.0% quarter-on-quarter (QoQ), after gaining for two consecutive quarters.  The overall index is up by 2.0% year-on-year. Of the 23 cities tracked by Knight Frank’s Asia-Pacific Prime Office Rental Index, 17 cities recorded stable or increasing rents in Q2 2022, as compared to 21 in the previous quarter.

Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “As the economy stabilises post pandemic, there is a rise in new hiring across most industries along with a move towards return to office which is propelling demand for offices in India. The Indian office market witnessed strong leasing trend that continued into Q2 2022 with Bengaluru leading in transaction volumes. With its unique position, India can expect its key driving sectors such as IT/ ITeS to continue to grow despite global headwinds.”

Key highlights of the performance of key Indian cities:

Bengaluru

With an increase of 12.1% YoY, Bengaluru was the best-performing prime office market in the APAC region in terms of rental growth in Q2 2022 as compared to the last year. The rental value in the city is projected to rise during the following 12 months. With the 22^nd position on APAC Prime Office Rental Index, the city finds itself as one of the least expensive prime office markets in APAC region. The prime office rent of the city was recorded at INR 1,620/sqft/year.

Mumbai

The prime office rent of the city was recorded at INR 3,622/sqft/year and was the 11^th most expensive commercial market in the APAC region. The prime office market of the city grew 7% YoY after three quarters of stagnation. The rental value is expected to increase over the next 12 months.

Delhi-NCR

The prime office market of Delhi-NCR continues to see rental values maintain levels seen in the past four quarters. However, the rental value is expected to increase over the next 12 months as transaction volumes are expected to pick up going forward. The prime office rent of the city was recorded at INR 4,078/sqft/year.

APAC Prime Office Rent, location – Rank by Occupancy cost (US$/ Sqft/ Yr)

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