Mumbai's office rentals lowest among top 15 global cities, says report

Office rentals in Mumbai are at their cheapest at Rs 250 per sq. ft per month among the top 15 global cities. In comparison, office spaces in London and New York cost Rs 900 and Rs 360 per sq. ft respectively. However, despite the affordable prices, current vacancy levels within the Mumbai office market lies at 23 per cent, which is highest as compared to the other cities.

As per the Knight Frank Global Cities report, Mumbai this year slipped to the 10th position from being ranked sixth in 2007 among the top 15 global cities in terms of office rentals.

Knight Frank, the global real state brokerage and research firm released its inaugural report on Wednesday. The report assessed the office markets of Mumbai and 4 other global cities with more than 1.1 billion new urban dwellers and a forecast for the next 5 years. The report said that the Mumbai's office rentals are expected to grow by nearly 15 per cent over the next five years.

In contrast, rental yields within the city's office market are also the highest at 10.3 per cent as compared to cities like Sydney, Washington and Shanghai which offer rental yields of 6.3 per cent, 6.2 per cent and 6 per cent respectively.

Reporter further stated that the price appreciation across Mumbai's prime residential areas has been the least over the last five years among the top 15 global cities.

Dr Samantak Das, chief economist and director of research at Knight Frank India said, "The delayed revival of the Indian economy coupled with lack of business confidence has taken a toll on the Indian office market. This has led to Mumbai slipping from the 6th to the 10th rank in terms of the Global Cities rental ranking between 2007-14.While rental decline has been the primary reason, a depreciating rupee added fuel to the fire," said Das.

Nicholas Holt, head of research, Knight Frank Asia Pacific, said, "Technology and IT sectors have been the key drivers of the take-up of office space in Asia. Financial services and banking, the sectors that led the pre-global financial crisis boom, continue to be more cost-conscious, and while there is still demand from these sectors, there has been less front or prime office demand. Over the coming years however, we expect financial services and banking occupiers to come back to drive sizable segments of demand," said Holt.