Office Rental Property Markets That Gained Momentum In Q3'17

According to a report released by commercial real estate company Colliers International, Rental Insight Q3 2017, micro markets of major cities, including Gurgaon, Bengaluru and Pune, emerged as the top performers. Some of these micro-markets witnessed the highest rental growth year-on-year when compared to the same quarter previous year.

Let us look at these top performers of the third quarter:

Central Business District, Bengaluru

The Central Business District (CBD) of Bengaluru is leading the charts gaining a whopping 16.7 per cent in rentals when compared to the same quarter previous year (Q3'16). The CBD includes areas such as the MG Road and the Vittal Mallaya Road. The location, the connectivity and the proximity to some of the prime residential real estate markets make this one of the most sought-after commercial markets. Also, the lower supply and higher demand are further expected to push the rentals upward. The rentals here stand at Rs 110-170 per sqft/month. The vacancy of properties here stands at as low as seven per cent.

Golf Course Road, Gurgaon

The commercial property rentals in Gurgaon's Golf Course Road witnessed a growth of 14.8 per cent year-on-year in Q3'17. The locality took a 30 per cent share of Gurgaon's absorption, making it one of the most in-demand commercial destination. This growth has been attributed to the Metro connectivity and also, the coming of many residential projects around the area. The rentals here at the end of Q3 stand at Rs 110 – 200 per sq ft/month.

 Baner, Pune

Pune's Baner made it to the list, too, with a rise in rentals by 10.9 per cent. The rentals at the end of Q3 stood at Rs 57-65 per sq ft per month. The market, located in the suburbs of Pune, witnessed a rise in rental due to rising demand from the suppliers and limited vacancy.

 OMR Pre-Toll, Chennai

 The OMR Pre-Toll is the IT and ITes hub of the city. It witnessed a 10.8 per cent growth in rentals when compared to the same quarter previous year. The rental here at the end of Q3'17 stood at Rs 55-78 per sqft/ month. The area includes localities such as Taramani, MGR Salai, Kandanchavadi, Perungudi. The demand is high in this area while vacancy is low. The market held 51 per cent of the total absorption in the Chennai market in Q3'17. 

Hadapsar/Fursungi, Pune

Located close to some of the prime and most sought-after residential micro markets of Pune, Hadapsar/Fursungi witnessed a 10.2 per cent growth in rentals in Q3'17 when compared to Q3'16. One can lease an office space in the locality for a rent of Rs 65-75 per sqft/month. The locality is home to many IT/ITeS companies and also, houses state-of-the-art township, Magarpatta City.

Kharadi, Pune

Just slightly falling short of the growth of Hadapsar/Fursungi, Pune's Kharadi is another chart-topper with 10.1 per cent rise in rentals in Q3'17 compared to the third quarter in 2016. The locality, which houses prominent commercial hubs such as EON IT Park and World Trade Centre, faces severe supply crisis and a growing demand for commercial space. The rentals swing here between Rs 52-100 per sqft/month. However, with the ongoing construction for new supply, the rentals are expected to stabilise in the coming three to four years, the report says. The locality is also surrounded by some of the prominent residential real estate markets, too.

DLF Cyber City, Gurgaon

Lying in the heart of the Millenium City, DLF Cyber City has over the years been one of the most sought-after commercial real estate destination. Home to many IT companies, the continuous difference between the dropping vacancy and rising demand has taken the rentals here 9.5 per cent higher than the rentals in Q3'16. The locality has everything one would yearn for – connectivity, good infrastructure, premium infrastructure and proximity to Gurgaon's housing societies. The rents, at the end of Q3'17, stood at Rs 110-120 per sqft/month.

Secondary Business District, Hyderabad

The Secondary Business District or SBD in Hyderabad is one of the top 10 gainers in commercial real estate rentals. The rents here went up eight per cent year on year and stood at Rs 55-65 per sqft/month. The SBD covers Madhapur including HITEC City, Gachibowli, Nanakramguda, Manikonda, Raidurg and Kondapur. Some of the leading names that leased office space here include Microsoft (HITEC City), Ness Technologies (Raidurg) and Digital Domain (Gachibowli). The locality is also connected with the recently launched Hyderabad Metro.

Hosur Road, Bengaluru

The 10-km long stretch is a bustling commercial real estate market which has witnessed a 7.7 per cent year-on-year growth in rentals in Q3'17. The locality, which is well-connected to some of the prominent residential and retail areas, has a rental of Rs 30-40 per sqft/month. The locality has no supply of new space and yet receives constant demand from existing tenants for larger spaces.

Outer Ring Road (ORR), Bengaluru

Another prominent commercial real estate market is the ORR stretch starting from KR Puram and ending at Hebbal. The locality that saw an absorption rate of 74 per cent of the total in Bengaluru, witnessed a rise of 7.1 per cent in the commercial rentals year-on-year in Q3'17. With a rental value of Rs 70-80 per sqft/month, ORR is expected to have a new supply of spaces to fulfil the ever-rising demand.