Micro-markets office rental values up 8-17% in Q2: Colliers report
Global real estate services company, Colliers International has said in its latest report that as the demand for office spaces continued to rise in the second quarter of 2017, rental values in micro-markets of Bangalore, Chennai, Gurgaon, Pune and Hyderabad have witnessed 8-17% on-year growth. In the first half of 2017, Bangalore and Hyderabad both witnessed single digit vacancy levels hovering between 8-9% due to a lack of quality grade A supply thus leading to increased rental values in few micro-markets, showed data from Colliers Research.
The highest growth was observed in Bengaluru CBD micro-market. In spite of having limited availability of office spaces and supply, this market has witnessed 17% on-year rental appreciation, said the report.
In 2016, a few Pune micro-markets witnessed on-year y rental growth of up to 19%. Although the supply woes continue across Pune micro-markets, rental values have stabilized in the quarter ending June, after a considerable increase in 2016. In Pune, Hadapsar market has been emerging due to some notifying projects such as Magarpatta city and other projects offering large floor spaces. This sub-market is predominantly an IT/ITeS market with residential localities in the nearby catchment area. Hadapsar market has observed 10.2% rental growth. In Pune’s Kharadi micro-market, rentals have increased 10.1%.
According to the report, Chennai office CBD, which is predominantly an IT market has observed 13% on-year rental growth. Apart from IT and BFSI, consulting companies have their setup in Guindy, MRC Nagar and Saligramam. During the second quarter, this micro-market accounted for 16% of total absorption.
In Gurgaon, DLF Cyber City (IT) has witnessed 12% year-on-year rental growth. The micro-market holds 9% share in the total office space absorption during the second quarter of 2017.
Bangalore’s EPIP/Whitefield has witnessed rental growth of 10%, while Hyderabad’s secondary business market including HiTECH City, Madhapur, Gachibowli and financial district saw rents moving up 10%. Rentals in Bangalore’s Electronic City, Hosur road and Chennai’s OMR Post Toll micromarket office space rentals grew 8-9% from a year ago.