Mumbai (Maharashtra) [India], Mar 18 : A total of six out of top eight Indian cities feature in the top 10 markets of Asia Pacific region in terms of annual leasing transaction volumes, according to Knight Frank.
Bengaluru with 15.3 million square feet and Hyderabad with million square feet were the second and third largest office markets in the A-Pac region in terms of office leasing transactions.
They were followed by Mumbai 9.7 million square feet and National Capital Region 8.6 million square feet which rank ahead of cities like Beijing, Shanghai, Singapore, Jakarta, Kuala Lumpur and several others.
According to Knight Frank research, 2019 was a milestone year for the Indian office market with 2.9 billion dollars of private equity investments. The all India office transaction activity reached a historic high of 60.6 million square feet, predominantly driven by demand from these three segments -- IT, BFSI and co-working.
"Some of the Indian cities have stepped on the pedestal and stolen the limelight from other cities in the A-Pac region," it said.
Four out of top six cities in India except for Mumbai and NCR have single-digit vacancy levels. The problem of supply crunch is acute in markets of Pune and Bengaluru which had a city level vacancy of 4.2 per cent and 4.8 per cent respectively at the end of 2019.
For Mumbai and NCR, the vacancy levels may be higher at a city level. However, for the sought-after business districts of these cities like Bandra Kurla Complex and Lower Parel in Mumbai and Golf Course Extension Road and DLF Cybercity in Gurugram, the vacancy levels are in single digits.
The robust demand from occupiers, low vacancy rate, compression in cap rate and rent growth highlights strong fundamentals of the Indian office market.
"The availability of vast talent in India in the fields of science, technology, engineering and mathematics (STEM) and cost arbitrage make India one of the most attractive office destinations for compes in the BFSI and IT sectors," said Shishir Baijal, Chairman and Managing Director of Knight Frank India.
"A balanced demand-supply equilibrium has led to double-digit rent growth in most leading Indian markets, making the investment premise very promising and PE investments of 13 billion dollars in the past decade are a testament to it," he said in a statement.
Since 2011, the Indian real estate sector has received an equity investment of 22.7 billion dollars across the office, retail and warehousing assets in the previous decade. Of the total, the office assets garnered 57 per cent share or 13 billion dollars worth of these equity investments.
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 19,000 people operating from over 512 offices across 60 markets.
( With inputs from ANI )