Jones Lang LaSalle’s Asia Pacific Office Index Q2 2013 reveals that Mumbai and Delhi NCR’s most active secondary business districts (SBDs) stand at 6th and 13th rank respectively among business districts of top cities in Asia Pacific Region. The secondary business districts (SBDs) of Bangalore and Chennai barely make it into the top 30 districts, occupying 26th and 27th place respectively.
The indices show that cities in India still offer competitive real estate prices. This factor provides a compelling incentive for international companies to choose India over other countries for setting up their offices, provided that other business requirements such as availability of talent, location, the size of market they serve and infrastructure are met.
Ashutosh Limaye, Head – Research & REIS, Jones Lang LaSalle India says, “While this is good news for occupiers, it does not bring cheer to landlords and developers. Mumbai’s Bandra Kurla SBD was ranked 3rd on this index in 3Q CY 2009, while Delhi SBD ranked 6th then. Both have slipped to 7th and 13th places respectively in 2Q CY 2013. SBDs in Bangalore and Chennai have slipped by one place each during the same period. This means that after the Global Financial Crisis of 2008-09, Indian cities have not recovered from the rental and price correction of between 20-40% from the peak values of 3Q CY 2008. Other business districts in Asia Pacific have performed better.”
Bangalore is the only city in India that is close to peak prices, with a current index of 99 (base index of 100 as of 3Q CY 2008). All other cities are far behind, with Mumbai City and Mumbai Suburbs indexing at 61.8 and 66.5, Gurgaon and NOIDA at 76.1 and 77.7 and Chennai at 84.2.
“That said, there has been a sharp polarization at work – there are fewer high-quality office projects at desirable locations and several average-quality projects at avoidable locations in Indian cities,” says Limaye. “Going forward, we anticipate healthy appreciation in rents with high occupancies for the projects falling in the first category – and a prolonged wait for occupiers at discounted rates for the latter.”