Connaught Place 6th Most Expensive Office Market in Asia Pacific
Connaught Place in New Delhi has the sixth most expensive rentals for premium offices among 20 major markets in Asia Pacific region, according to data from global real estate consultant JLL. The average occupancy costs – including rent, taxes and service charges – in Connaught Place are at $142, which is higher than Pudong in Shanghai, Shinjuku in Tokyo and even Singapore.
Among other Indian cities, the financial hub of Mumbai is ranked 14th with occupancy costs at $96. The rankings are based on the fourth edition of JLL’s Premium Office Rent Tracker (PORT) for 2018 that calculates data on the achievable rent in the highest quality building in the premier office districts of 61 cities.
In 2017, Delhi and Mumbai were ranked third and 11th respectively.
According to Ramesh Nair, CEO and Country Head, JLL India, “The commercial office segment is a strong growth driver for the real estate market in Delhi-NCR. Since early 90s and especially in the post-liberalization era, Connaught Place has been one of the most preferred and sought after office locations by leading Indian and global corporates. This coupled with limited supply of office space, its centralized location in the heart of Delhi, robust infrastructure and good connectivity makes Connaught Place the perfect destination for companies to have an office address there.”
“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 NCR. With the Delhi NCR market witnessing 25% on year increase in net absorption at 3.2 mlnsq ft during January – September period, we are quite optimistic about the this growth trend continuing in the near-term as well,” said Samantak Das, Head of Research and Chief Economist, JLL India.
With an 18% on year increase in net absorption at 23.4 mlnsq ft during January – September 2018, the commercial office sector in India continues to witness strong growth momentum. A combination of factors like strong economic fundamentals, demand for good quality grade A office space, institutional investments in commercial office assets along with the co-working office trend catching up in key markets is driving this double-digit growth, according to JLL Research.
Hong Kong’s Central Tops List
For the fourth successive year, Hong Kong’s Central has the world’s most expensive rent for premium offices at $338. The occupancy costs are 60 per cent higher than New York’s Midtown and nearly 75 per cent more expensive than London’s West End, data from PORT shows.
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 decentralized 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.
Districts in cities in Greater China (Hong Kong, Beijing, Shenzhen and Shanghai) now represent six of the top 10 most expensive premium office markets in Asia. As a result, decentralization is taking place in many Chinese cities as companies look to make savings, with premium occupancy costs averaging US$338 per square foot in Hong Kong’s Central, US$189 per square foot in Beijing’s Finance Street, and US$131 per square foot in Shanghai’s Pudong district. Meanwhile, Singapore made its way into the top 10 for Asian cities, up from 14th place in 2017.
Banking and Financial Services Firms Top Occupiers Worldwide
The banking and financial services industry are the top occupiers of premium office space globally, as the leading sector in more than half of the 72 markets covered.
“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,” says Jeremy Sheldon, Managing Director, Markets and Integrated Portfolio Services, JLL Asia Pacific.
Corporate occupiers across all industries are seeking to consolidate and streamline their portfolios in strategic locations. There is growing recognition of the role that real estate plays in talent attraction and retention. Hong Kong’s Central is a prime example for its excellent transport connectivity, local amenities, and the quality of digital infrastructure – factors that organisations consider when choosing their next office location.