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Office Market Costs Dip Further in Mumbai and Delhi
While Mumbai’s Nariman Point dropped to 5th place ($170.85 per sq ft per annum), London’s West End ($248.66) and Moscow ($234.73) remain the world’s two most expensive office markets, respectively. Hong Kong’s CBD and Tokyo’s Inner Central District round out the top five, according to CB Richard Ellis Group Inc (CBRE) Research’s semi-annual Global MarketView/Office Occupancy Costs survey. Mumbai, which was second in November 2007, fell to fourth place in May 2008. New Delhi’’s CBD — which was placed at number eight in May 2008 — dropped to 13th place ($122.18) in the report. The report tracks world markets with the highest as well as fastest-growing occupancy costs for the 12 months ended September 30, 2008. The average rate of growth for office occupancy costs among the 172 markets monitored in the survey was 8 per cent, almost double last year’s world Inflation rate.
Anshuman Magazine, chairman & MD, CB Richard Ellis South Asia, says, “India’s office market slowdown is reflective of the global economic slowdown as a majority of the occupiers of quality office space are multinational companies. Office supply too has seen a substantial increase in the past few years. In spite of this, Mumbai and New Delhi continue to be in the top 15 world’s most expensive office markets.” “Our current perceptions are greatly affected by the current economic malaise and we tend to forget how fast rents and occupancy costs were rising over the last 12 months,” said Raymond Torto, CBRE’s global chief economist. “Clearly the rate of change is generally slowing, and in some markets the pricing direction is down. The turn in rent trajectory will provide some relief to occupiers and angst to owners. However, unlike previous downturns, which have occurred simultaneously with extensive overbuilding, the real estate market globally today is in a stronger position to weather the difficulties than in the past.”
Up 94.6 per cent, Abu Dhabi, United Arab Emirates (UAE) had by far the fastest growing occupancy costs, with three of the top five fastest growing countries situated in the Middle East. The rise in occupancy costs in the UAE over the past twelve months has reflected market fundamentals – limited supply of quality office space and high demand from international firms, primarily law firms, financial institutions and real estate and construction companies planting a footprint in the UAE.
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