Connaught Place in Delhi is the country’s costliest office market with an average cost of USD109 approximately ?8,271 per sq ft per year.
This figure is higher than the premium office occupancy cost of San Francisco.
Calculation Of Rental Costs
According to international property consultant Jones Lang LaSalle or JLL’s Premium Office Rent Tracker (PORT), Connaught Place has reached the 17th position from the 25th last year.
Occupancy costs refers to the cost of the net leasable area (actual rentable area).
Its calculation includes all costs for an occupier including the rent (effective rent payable after considering rent-free period, tenant improvement allowances), service charges (maintenance, etc.) and government taxes payable on the rent.
Delhi is followed by Mumbai’s Bandra Kurla Complex at a close second at USD102 per sq ft per year.
BKC is the second most expensive Indian city office market.
Mumbai’s central business district CBD is at 63rd position with an annual occupancy cost of USD 58 per square feet.
Office spaces in Connaught Place and Mumbai BKC are mainly occupied by banking and financial services firms, which is in line with the global trend.
Meanwhile Chennai has emerged as the cheapest of the lot with occupancy cost of USD21 per sq. ft. year.
It is now the 4th most affordable office market globally.
JLL reports that prime market occupancy costs have reached new heights owing to limited availability and moderate construction pipelines.
While Delhi and Mumbai continue to dominate the overall premium office occupancy costs in India, Bengaluru (USD 51 per sq. ft. per year) and Gurgaon (USD 44 per sq. ft. per year) have relatively lower rentals compared to global markets.
Why Costs Remain Low
The latter two have an advantage of a robust entrepreneurship startup ecosystem which increases its appeal to international occupiers seeking premium office space at lower costs.
Global capability centres and technology companies dominate the office landscape in Bengaluru.
It also remains the most preferred IT/ITeS destination in India.
The cost in Gurgaon, Delhi NCR, decelerated from $48 per sq ft (?3,642) to $44 per sq ft ( ?3,339).
Global Top 5
New York-Midtown and Hong Kong-Central jointly share the title of the world’s most expensive office markets.
Both cost USD 261 per square feet annual occupancy costs and are propelled by the banking and finance sectors.
Rounding up the top five of the global list are Beijing-Finance Street, London-West End, and Silicon Valley.