Office rentals in major cities to go up

Office rentals in the central locations of major Indian cities has started to pick up, although this did not have any positive impact on rental rates in decentralised office areas, according to real estate consultancy CB Richard Ellis.

In New Delhi, rents for A-grade offices in the central business district firmed up 4.5 per cent in the third quarter ended September 2009, compared to the immediately preceeding quarter, the consultancy said in its Asia Office Market View Report for Q3 2009.

"The increase in demand is largely due to improving economic conditions, positive market sentiments and growing corporate confidence. However, it would take some time for the supply-demand gap to get bridged, thus both rental and capital values are expected to remain stagnant or under downward pressure in the medium term," CBRE-India chairman and MD Anshuman Magazine said.

In Mumbai, however, many companies preferred to move to locations in the extended and alternate business districts in order to reduce their real estate costs.

The report also said India is expecting a large quantum of new office space to come up over the next few quarters.