Metropolitan Cities Are Beaten By Kolkata In Office Rent Growth

Kolkata sets the records of the highest growth in office space rentals in India. Beaten the big metropolitan cities who use to be known as the king of real estate markets like Delhi, Bangalore and Mumbai. What’s more you see? Not only one, but four locations in the city - Park Street, Dalhousie Square, Park Circus connector and Rashbehari connector - figured in the list that recorded the highest rental growth in commercial Property in Kolkata last year. Real Estate rates in Mumbai, Bangalore and Delhi are still the higher than Kolkata, the rentals in city have gone up when cities saw a price correction. Rashbehari connector links Gariahat to Ruby, witnessing the highest appreciation in rental values in 2011 at 28.1% over previous years. Other three location that recorded high growth rate were Dalhousie Square at 24%, Park Street/Camac Street at 18.4% and Park Circus connector at 26.1%. While monthly commercial property (office space) rentals in Park Street shot up from Rs. 103/sq ft in 2012 to Rs. 122 in 2011, increased from Rs. 50 to 62 in Dalhousie, Rashbehari connector Rs. 57 to 73  and from Rs. 60 to 76 along Park Circus connector. High growth is driven by scarcity in quality office space at these locations. In recent times, big projects have come up with Grade ‘A’ supply that commands premium over others as said by relators. Suburban Hyderabad was the only location where rental space increased by more than 15%. Hyderabad’s office space rental have increased from Rs. 32 to 38 or 18.8%. Location that figured in top 15 areas are Bangalore, Mumbai, Chennai and Pune In the meantime, Mumbai’s central business district (Nariman Point) dropped from the eighth to 15th spot in the annual report on commercial property across the world by global property consultants Cushman & Wakefield. This is the first time over six years that Mumbai has dropped out of the top 10 rent rankings. London, Tokyo and Hong Kong has maintained their position as the top three on the annual chart, Beijing (5) and Sydney (7) came into top 10 for the first time in 2012. India executive director of Cushman & Wakefield Mr. Ravi Ahuja Said - Decline of MUmbai’s CBD rentals is reflective of two very important aspects first, that other micro markets across Mumbai are witnessing a growth vis-a-vis the CBD. Second, there is certain amount of rationalisation in rentals in locations that had seen unprecedented rise in peak periods of 2007-08. Nariman Point has seen steady and perhaps planned decline in the few years as other micro markets like Bandra Kurla Complex and Lower Parel recorded a corresponding rise. BKC consciously planned to decongest the CBD over period of time and seeing this phenomenon setting in. As Nariman Point saw a rental decline of approximately 8% in 2011 allowing location to slip in global ranking largely due to diminishing interest from occupiers on account of higher prices, growing distances from residential hubs and lower quality and age of construction. Trend of shift in focus from the CBD to other locations is also visible in prime market of commercial property in Kolkata , Bangalore and NCR where the peripheral and suburban locations are witnessing a rise in activities. Not only these locations have cost advantages over traditional locations but they are able to offer greater value in terms of social and civic infrastructure and good talent pool from the vicinity. Mr. Abhijit Das joint managing director of realty consultancy firm Lemongrass says - the high rate appreciation in rent in Kolkata is not only owing to low base rent but also due to lack of land parcels in the Kolkata city. As there is no prospect of large-scale development of new holdings in Kolkata but few opportunities available see competing bids leading higher rentals.