"Leasing activity in India has slowed down during the third quarter. This was because businesses began to feel the impact of financial turmoil overseas," CB Richard Ellis South Asia chairman and managing director Anshuman Magazine said.
The low volume of leasing led to a marginal correction in quoted rentals for the central business districts (CBD) of the national capital, the consultant said in a statement.
Rentals across premium buildings in Mumbai, the financial capital of the country, also underwent a correction while rentals in Bangalore remained static, it pointed out.
The report 'Asia Pacific Office Market Review for the third quarter of 2008' noted that the Asian office market has slowed further in the wake of global economic crisis.
"The quarter saw the further easing of momentum in office leasing and the remainder of 2008 is likely to see the end of the upward cycle as potential occupier grow cautious about committing to premium space," the consultant said.
The prime office rentals in the third quarter were static in major CBD's including those in Beijing, Hong Kong, Seoul, Ho Chi Minh City and Singapore.
Tokyo recorded its third consecutive quarterly drop in rentals, while average prime office rents began to consolidate in New Delhi, Shanghai, Philippines, Manila and Bangkok.
CBRE pointed out that in China also, the positive effects of hosting the Beijing Olympics and Paralympics could not prevent the office rental growth from slowing as leasing activity took a backseat to the games.
In Shanghai, the office rentals in Pudong recorded their first downward movement since 2005 as the large quantity of new supply launched over the past nine months began to impact the market.
"These trends in the Asian office market reflect the deterioration of overall business sentiment across the region. Confidence has taken a hit despite the fact that corporates bankruptcies and job cuts in Asia have been less severe that those in the US and Europe.
"The impact of this change in business confidence is therefore reflected in the commencement of a period of consolidation in the region's prime office markets," CBRE said.
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