DELHI: Despite weakening demand for office space Connaught Place (CP) remains the fifth most expensive office market in the world.
In property consultant CBRE’s semi-annual Prime Office Occupancy Costs survey, CP has retained its earlier ranking in the list of the world’s 50 most expensive office markets. The latest survey provides data on office rents and occupancy costs as of March 2013 across 133 countries.
“Though demand for office space has reduced, occupancy costs remain high, especially in Connaught Place, due to limited supply in the near future,” said Anshuman Magazine, chairman and managing director, CBRE.
And the gap in office real-estate occupancy cost between central business districts (CBDs) such as Connaught Place and suburbs such as Gurgaon (ranked 72nd) stays wide.
In Mumbai the occupancy costs in Nariman Point, the country’s first planned CBD, have reduced further. In the CBRE survey, Nariman Point dropped to 26th position at $90 per sq ft per annum. In December 2012, it had ranked 25th.
But the Bandra-Kurla Complex (BKC) retained its earlier ranking (11th) among expensive office markets, CBRE said.
CBRE analysts said the Mumbai CBD — including the micro markets of Nariman Point, Fort and Cuffe Parade — had seen office space absorption of only 8,000 to 10,000 sq ft during the quarter. Office rental values in these micro markets declined 3-4% sequentially in January-March, they said.
In the past few years, Nariman Point has lost some of its sheen and has seen rising vacancy levels since many companies have chosen to move offices to locations such as BKC, Lower Parel and Andheri. Rentals in the CBD have also fallen from over Rs 300 per sq ft a month in early 2011 to about Rs 250 now.
Transaction activity was upbeat in BKC, with around 0.18 million sq ft of Grade A office space absorbed during the quarter. “The existing vacancy pressures and further supply addition (in BKC) during the current quarter have led to a decline in rental value by 3-4% quarter-on-quarter,” the analysts said.