Office rents to rise 5-10% in Mumbai, Southern cities

According to JLL, Mumbai absorbed 5.46 million sq ft or 18 per cent of total office absorption in the country.

Backed by strong demand for prime office properties in Bengaluru, Hyderabad, Mumbai and Chennai, rentals for these properties are expected to go up 5-10 per cent this year.

According to property consultants, Old Mahabalipuram Road in Chennai, secondary business districts of Bengaluru, and Bandra Kurla Complex (BKC) in Mumbai are likely to see a 10 per cent jump in office rentals.

“There is a clear pick-up in demand with corporates executing their growth plans, which were on hold," said Ashutosh Limaye, head of research at JLL India.

According to JLL, Bengaluru recorded 9.39 million sq ft of office space in 2014, the highest absorption among all cities in the country - 31 per cent of total office absorption in India.

Office clients are now ready to give the rentals demanded by office developers unlike earlier when negotiations were the order of the day, consultants say.

"I have six clients who are looking to lease properties in Bengaluru, but we are yet to find any ready properties.

Clients are ready to pay up whatever rental demanded by developers," said Ashok Kumar, managing director of Cresa Partners, a commercial realty services firm.

According to JLL, Mumbai absorbed 5.46 million sq ft or 18 per cent of total office absorption in the country.

Close to 30 million sq ft of office space got absorbed in 2014 - a three-million jump in net absorption compared to the previous year.

According to HDFC Securities, the third quarter of 2013 recorded the absorption of 10.1 million sq ft, which is 40 per cent up on a quarterly basis and 95 per cent up on a yearly basis.

According to the brokerage, this is the first time the pan-India quarterly absorption crossed 10 million sq ft.

“With improved sentiment in capital markets and corporate activity, there are several deals in the pipeline that may drive absorption levels upwards from CY2015,” said HDFC Securities analyst Adhidev Chattopadhyay in a recent report.

Rent graph in south goes north

Bengaluru recorded 9.39 mn sq ft of office space in 2014, the highest absorption among all cities in the country - 31 per cent of total office absorption in India, says JLL India research Old Mahabalipuram Road in Chennai, secondary business districts of Bengaluru, and Bandra Kurla Complex in Mumbai are likely to see a 10 per cent jump in rentals