Despite the current issue with lack of infrastructure and clashes with displaced locals, India’s real estate prices continue to rocket. Mumbai and Delhi are now amongst the top ten most expensive office locations in the world, comparing with London, Hong Kong and Tokyo for the top slots.
A recent report by real estate consultants, Cushman and Wakefield put Mumbai, in terms of rental costs at fifth most expensive worldwide, and Delhi in tenth.
Cushman and Wakefield said in its report, “Office Space Across the World”…considering the global ranking of 10 most expensive office locations across all 203 cities in the 58 countries around the world, Mumbai’s Nariman Point was ranked 5th, with Mumbai Central (Worli) at 7th position and New Delhi’s CBD (Connaught Place) at 10th in the study. The rental in Mumbai was estimated at £912 per square meter per year, while that in Delhi was found to be £706 per square meter per year. This compared to London, (not the West End) which stands at £1,711 per square meter per year.
The Indian financial markets have been performing extremely well over the last few years, encouraging a multitude of foreign investment banks and institutional fund houses, along with international property developers to enter the market. The Indian government is keen to create a world financial center in Mumbai, and many recent arrivals have headed to Mumbai, leading to a surge in demand while lack of inventory or new supply continues to plague the market. This has lead to a phenomenal increase in rentals similar to what was witnessed in the early 1990s.
C&W’s joint MD (India) Sanjay Dutt, said, “Most micro markets in Mumbai saw an upward trend in rental values largely due to very low vacancy and lack of new supply in these micro markets as projects were delayed. The city saw only approximately 0.45 million square feet of supply in 2007 with it largely being non-IT and essentially absorbed by the banking & financial institutes, media & insurance.” He added that the growth of Indian economy that led to corporate expansion has also impacted the market. The significant rental growth witnessed in India has also placed eight India micro markets in the top ten locations in terms of rental growth, the report said.
The highest growth was achieved by Kolkata’s Rashbehari Connector with an increase of 86% followed by Mumbai’s Suburban micro market Powai at 83%. In Mumbai, suburban location such Andheri, Malad and Mumbai – CBD recorded 71% 64% and 60% respectively. Gurgaon in NCR witnessed the highest appreciation in the region at 47% while New Delhi – CBD recording 46%.