Mumbai: Best Investment Hotspot for Office Space

Bangalore: The financial capital Mumbai is known as one among the traditional real estate markets in India after Delhi. Recently, Mumbai’s central business district has emerged as the most attractive investment hotspot for commercial properties in India. The office space demands in the city has rose to 19 percent net annual return and the prices are expected to increase further by 63 percent following rentals by 47 percent over years, according to Knight Frank’s report.

Whereas, the country’s IT capital, Bangalore and Delhi-NCR (National Capital Region) have come second and third on the list. Delhi and Bangalore have witnessed around 11 -12 percent return on investment in commercial properties, according to the report.

Unlike other metros, the scenario in Mumbai’s central and suburban business district (SBD) west are better and have grabbed the top positions on the list. "At 19 percent per annum return, Mumbai's central district, which comprises Parel, Lower Parel, Dadar, Prabhadevi, will yield the best return on investment in the country,'' said  Samantak Das, chief economist  of Knight Frank India.

Despite the weak demand and slow uptake, the office space market in Mumbai had rose from 47.4 million square feet to 95.1 million square feet between 2008 and 2012. The rate of vacancy observed a sharp increase from 4.3 percent to 23.2 percent but the office rentals dropped by 10-40 percent during the same period.

Earlier, Delhi-NCR had the biggest office space market in the country with around 110 million square feet, of which about 88 percent space was occupied by IT.  Even, Bangalore was one of the most significant office space markets in South India where IT/ITeS sector and online retailing companies have set up their increasing the demand for office space.

Mumbai (BKC & off BKC), Pune (SBD East) and Hyderabad (SBD) have grabbed the third position on investors return at 14 percent per annum. "While IT dominates Bengaluru and BFSI remains significant for Mumbai, NCR has a more diversified demand for office space. Also, more and more corporates are evaluating NCR due to better infrastructure and availability of manpower," said Viral Desai, director, Knight Frank India.

The business districts of the National Capital Region (NCR) and Bengaluru, despite being the largest office markets in the country, will lag behind other cities in terms of investor return, Das said.

The office properties in Delhi-NCR would give an annual return in the range of 8-11 percent to investors.

Moreover, the economy is likely to improve in the coming years. With the improvement in economy the demand for office space in metros like Mumbai and Delhi also expected to increase.

(With PTI inputs)

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