Mumbai, Delhi slip in office rental

Having an office space in Delhi and Mumbai isn't as expensive as it used to be a year ago. Both the cities have come down by three spots in JLL's Premium Office Rent Tracker for the Asia Pacific Region with Hong Kong continuing to top the chart.

New Delhi's Connaught Place is sixth most expensive in terms of rentals for premium offices among 20 major markets in Asia Pacific region. The average occupancy costs – including rent, taxes and service charges in Connaught Place are at $142 (Rs 10,000), which is higher than Pudong in Shanghai, Shinjuku in Tokyo and even Singapore.

Mumbai, which has been ranked 14th with occupancy costs at $96 (Rs 6,700).

In 2017, Delhi ranked third and Mumbai 11th on JLL's same index for the region.

The rankings calculates data on the achievable rent in the highest quality building in the premier office districts of 61 cities.

"Driven by single-digit stable vacancies, steady lease rentals and high absorption, Connaught Place continues to be the premier and leading office market for corporates from across broad spectrum of different businesses in Delhi National Capital Region. With the Delhi NCR market witnessing 25% on year increase in net absorption at 3.2 million square feet during January-September period, we are quite optimistic about the this growth trend continuing in the near term as well," Samantak Das, head of research and chief economist, JLL India, said.

This is JLL's fourth edition of the list and Hong Kong's Central area consecutively continues to be at the numero uno position by being not only Asia Pacific's but also world's most expensive to rent premium offices at $338 (Rs 23,700). "The occupancy costs are 60% higher than New York's Midtown and nearly 75% more expensive than London's West End," shows JLL's data.

The next three spots are taken up by China with Beijing's Finance Street, Shenzhen and Central Business District of Beijing being the second, third and fourth most expensive locations to lease premium office spaces in Asia Pacific.

"The high occupancy costs of Hong Kong's Central are driven by Chinese firms snapping up Grade A office space, although this demand has decreased in the last quarter. This has led some companies to search for more affordable office locations in decentralised locations. While Hong Kong East has traditionally been seen as a back office location by multinationals, it is increasingly being viewed as a prime office location," reads Premium Office Rent Tracker report.

Globally, these Grade A office spaces or premium locations are primarily occupied or leased by banking and financial services industry. "High-value, high-margin businesses in financial services such as private, corporate and investment banking firms, rent premium office space in Beijing, Shanghai, Tokyo and Singapore. While cost remains a key factor, these companies prioritise access to talent and the need for amenities when selecting their next office location. They target premium quality buildings to attract and retain top talent, which also helps to enhance their brand image," Jeremy Sheldon, managing director, markets and integrated portfolio services, JLL Asia Pacific, said in a statement.

GOING DOWN

• Both the cities have come down by three spots in JLL's Premium Office Rent Tracker for the Asia Pacific
   
• In 2017, Delhi ranked third and Mumbai 11th on JLL's same index for the region