Bengaluru, Delhi and Mumbai have highest prime office yields in the world: Knight Frank report


Whitefield in Bengaluru, has emerged as the most affordable tech district in the world, while the city also earned the highest prime office yields, says a report by Knight Frank

Three Indian metros – Bengaluru, Mumbai and Delhi – earned the highest prime office yields, among 34 leading international markets, according to a report by Knight Frank, titled ‘Global Cities: The 2018 Report’. Bengaluru topped the table with 10 per cent yields, followed by Delhi (9.20 per cent) and Mumbai (8.50 per cent).

 

Prime office yields index

RankingCityPrime office yield
1Hong Kong2.70%
2Paris3.00%
3Zurich3.00%
4Berlin3.25%
5Tokyo3.30%
6Singapore3.30%
7Frankfurt3.80%
8Madrid3.90%
9Amsterdam4.00%
10London (City)4.25%
11New York4.30%
12Dublin4.50%
13San Francisco4.50%
14Boston4.60%
15Seoul4.66%
16Los Angeles5.00%
17Seattle5.00%
18Sydney5.06%
19Washington DC5.10%
20Melbourne5.25%
21Miami5.50%
22Shanghai5.60%
23Chicago5.60%
24Austin5.80%
25Manila5.90%
26Beijing6.00%
27Dallas6.00%
28Brisbane6.38%
29Kuala Lumpur6.50%
30Bangkok7.00%
31Pittsburgh7.50%
32Mumbai8.50%
33New Delhi9.20%
34Bengaluru10.00%

 

Commenting on the findings, Shishir Baijal, chairman and managing director, Knight Frank India, said, “Our spaces are being redefined and one of the most disruptive facets of the change in spaces, where we work, live and the overall urban ecosystem, would be acquisition of talent. Organisations would have to thoughtfully handpick global cities, zoom into smart office locations within them and tastefully shape these spaces, in sync with the fascinations of the crème-de-la-crème workforce making the world work today. It is needless to state that the evolution, would be driven by technology and smart intelligence.”

 

Tech districts

  • Bengaluru’s Whitefield emerged as the most affordable tech district, among 29 global tech hubs in the world.
  • Ranking 25th on the Tech Districts Index, Gurugram’s Cyber City (USD 20.40) beats Madrid’s Julian Camarillo area (USD 13.65) and Kuala Lumpur’s Cyberjaya Office Market (USD 11.55) in office rents.

 

Sr noCityTech DistrictPrime Rent (US$ per sq ft)
1LondonShoreditch90.75
2San FranciscoMid-Market77.00
3DublinDocklands76.30
4BangkokCBD : Rama 1, Sathorn, Sukhumvit Soi 2174.25
5Paris1st, 2nd and 9th Districts (Cité Financière)74.00
6BostonSeaport District72.00
7Los AngelesPlaya Vista62.00
8New YorkBrooklyn56.05
9BeijingZhongguancun55.05
10Washington DCNoMa (North of Massachusetts Avenue)51.25
11AustinThe Domain44.50
12SeattleSouth Lake Union44.00
13DubaiDubai Media City43.55
14SingaporeOne North41.45
15BerlinPotzdammer Platz40.70
16TorontoKing & Spadina39.90
17Hong KongCyberport, Pokfulam36.90
18MiamiCoconut Grove35.00
19ChicagoFulton Market District35.00
20AmsterdamCity Centre34.45
21SydneyPyrmont33.80
22MelbourneRichmond32.05
23ShanghaiZhangjiang Hi-Tech Park27.50
24Mexico CitySanta Fe27.30
25DelhiGurugram (Cyber City)20.40
26SeoulGuro-gu (Guro Digitial Complex) & Geumcheon-gu (Gasan Digital Complex)14.65
27MadridJulian Camarillo area13.65
28Kuala LumpurCyberjaya Office Market11.55
29BengaluruWhitefield9.65

 

“India’s office market witnessed a stellar run in 2016, as compared to the recent past. It is also a fairly accepted fact that India is home to some of the most affordable Central Business Districts in the world. The findings of the Global Cities: The 2018 Report reinstates the fact. Bengaluru’s Whitefield is a case in point. Despite the influence of global headwinds on mainstream occupiers, emerging trends such as co-working space providers, have continued to whip up demand in the supply-deprived market,” said Viral Desai, national director, occupier solutions group, Knight Frank India.

See also: PE inflow into realty to touch new high, exceed USD 4 billion in 2017: Knight Frank report

Skycraper index

  • Mumbai ranks 6th on the Skyscrapper Index growth in six months to Q2 2017.
  • Prime office rents in the upper floors of high rises in Mumbai see 1.8% growth, among the top six international rent appreciating markets.
  • India’s financial capital pips iconic global destinations such as London (0.0%), Hong Kong (1.1%),
  • Tokyo (0.0%) and Dubai (0.0%).

 

Sr noCityRent (US$ / sq ft / per annum)% growth in six months to Q2 2017*Growth rank
1Hong Kong$3041.1%9
2New York

(Manhattan)

$1621.8%7
3Tokyo$1400.0%10
4San Francisco$1173.5%4
5London (City)$1100.0%10
6Sydney$1073.4%5
7Boston$770.0%10
8Shanghai$67-3.9%23
9Singapore$66-0.9%21
10Beijing$667.6%2
11Chicago$621.6%8
12Paris (La Défense)$580.0%10
13Toronto$5811.9%1
15Melbourne$564.6%3
16Mumbai$561.8%6
14Frankfurt$540.0%10
17Los Angeles$45-2.2%22
18Dubai$440.0%10
19Taipei$410.0%10
20Madrid$390.0%10
22Manila$330.0%10
21Seoul$300.0%10
23Kuala Lumpur$23-0.8%20

 

Other key findings

  • Delhi emerged as the most expensive office market in India on the ‘What USD 100 million could buy?’ index followed by Mumbai.
  • USD 100 million can also buy more than half a million sq ft of prime office space in Bengaluru, the highest in the world.
  • Bengaluru emerged as the most valued destination on the Employment and Property Cost Index with total cost (salary + property) of USD 1,264,000.
  • Bengaluru and Mumbai top the chart among 10 future cities in terms of eating out spends. The two cities also feature among the top 5 future cities in terms of households with significant incomes.

 

According to Samantak Das, chief economist and national director – research, Knight Frank India, “Desires of the talent pool and rising disposable incomes, are set to shape our urban environments in the near future. We have already seen glimpses of the transformation with a shift in the expectations of mainstream occupiers. Today, we see that the office space expectations of mainstream occupiers resembling those of niche sections, such as the start-up fraternity or the Googles of the world. The global trend holds true for select Indian cities such as Bengaluru and Mumbai.”

 

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