Bengaluru, Delhi and Mumbai CBDs top prime office yields earners in the world: Knight Frank Global Cities - The 2018 Report

Posted by: at 9/28/2017 04:18:00 am


Ø  Bengaluru’s Whitefield is the most affordable tech district among 29 global tech hubs in the world.
Ø  Gurugram’s Cyber City (USD 20.40) pips Madrid’s Julian Camarillo area (USD 13.65) and Kuala Lumpur’s Cyberjaya Office Market (USD 11.55) in office rents.
Ø  Mumbai ranks 6th on the Skyscraper Index growth in six months to the quarter ending June 2017, beats London (0.0%), Hong Kong (1.1%), Tokyo (0.0%) and Dubai (0.0%) in rental growth

Mumbai, September 28, 2017: Knight Frank presents the future of real estate worldwide in the fourth edition of the Global Cities: The 2018 Report. The flagship global report reveals the trends shaping 40 leading international cities across the globe.

Key Findings:

Overview

·         Three Indian metros Bengaluru, Mumbai and Delhi earned the highest prime office yields among 34 leading international markets.

·         Bengaluru topped the table with 10% yields followed by Delhi (9.20%) and Mumbai (8.50%)

PRIME OFFICE YIELDS INDEX
Ranking
City
Prime office yield
1
Hong Kong
2.70%
2
Paris
3.00%
3
Zurich
3.00%
4
Berlin
3.25%
5
Tokyo
3.30%
6
Singapore
3.30%
7
Frankfurt
3.80%
8
Madrid
3.90%
9
Amsterdam
4.00%
10
London (City)
4.25%
11
New York
4.30%
12
Dublin
4.50%
13
San Francisco
4.50%
14
Boston
4.60%
15
Seoul
4.66%
16
Los Angeles
5.00%
17
Seattle
5.00%
18
Sydney
5.06%
19
Washington DC
5.10%
20
Melbourne
5.25%
21
Miami
5.50%
22
Shanghai
5.60%
23
Chicago
5.60%
24
Austin
5.80%
25
Manila
5.90%
26
Beijing
6.00%
27
Dallas
6.00%
28
Brisbane
6.38%
29
Kuala Lumpur
6.50%
30
Bangkok
7.00%
31
Pittsburgh
7.50%
32
Mumbai
8.50%
33
New Delhi
9.20%
34
Bengaluru
10.00%

TECH DISTRICTS

·         Bengaluru’s Whitefield is the most affordable tech district among 29 global tech hubs in the world.

·         Ranking 25th on the Tech Districts Index, Gurugram’s Cyber City (USD 20.40) beats Madrid’s Julian Camarillo area (USD 13.65) and Kuala Lumpur’s Cyberjaya Office Market (USD 11.55) in office rents.

Sr no
City
Tech District
Prime Rent (US$ per sq ft)
1
London
Shoreditch
90.75
2
San Francisco
Mid-Market
77.00
3
Dublin
Docklands
76.30
4
Bangkok
CBD : Rama 1, Sathorn, Sukhumvit Soi 21
74.25
5
Paris
1st, 2nd and 9th Districts (Cité Financière)
74.00
6
Boston
Seaport District
72.00
7
Los Angeles
Playa Vista
62.00
8
New York
Brooklyn
56.05
9
Beijing
Zhongguancun
55.05
10
Washington DC
NoMa (North of Massachusetts Avenue)
51.25
11
Austin
The Domain
44.50
12
Seattle
South Lake Union
44.00
13
Dubai
Dubai Media City
43.55
14
Singapore
One North
41.45
15
Berlin
Potzdammer Platz
40.70
16
Toronto
King & Spadina
39.90
17
Hong Kong
Cyberport, Pokfulam
36.90
18
Miami
Coconut Grove
35.00
19
Chicago
Fulton Market District
35.00
20
Amsterdam
City Centre
34.45
21
Sydney
Pyrmont
33.80
22
Melbourne
Richmond
32.05
23
Shanghai
Zhangjiang Hi-Tech Park
27.50
24
Mexico City
Santa Fe
27.30
25
Delhi
Gurugram (Cyber City)
20.40
26
Seoul
Guro-gu (Guro Digitial Complex) & Geumcheon-gu (Gasan Digital Complex)
14.65
27
Madrid
Julian Camarillo area
13.65
28
Kuala Lumpur
Cyberjaya Office Market
11.55
29
Bengaluru
Whitefield
9.65

SKYCRAPER INDEX

·         Mumbai ranks 6th on the Skyscrapper Index growth in six months to Q2 2017

·         Prime office rents in the upper floors of high rises in Mumbai see 1.8% growth, among the top six international rent appreciating markets

·         India’s financial capital pips iconic global destinations such as London (0.0%), Hong Kong (1.1%), Tokyo (0.0%) and Dubai (0.0%)

·         Established office markets such as Singapore (-0.9%) and Kuala Lumpur (-0.8%) see negative


Sr no
City
Rent (US$ / sq ft / per annum)
% growth in six months to Q2 2017*
Growth rank
1
Hong Kong
$304
1.1%
9
2
New York (Manhattan)
$162
1.8%
7
3
Tokyo
$140
0.0%
10
4
San Francisco
$117
3.5%
4
5
London (City)
$110
0.0%
10
6
Sydney
$107
3.4%
5
7
Boston
$77
0.0%
10
8
Shanghai
$67
-3.9%
23
9
Singapore
$66
-0.9%
21
10
Beijing
$66
7.6%
2
11
Chicago
$62
1.6%
8
12
Paris (La Défense)
$58
0.0%
10
13
Toronto
$58
11.9%
1
15
Melbourne
$56
4.6%
3
16
Mumbai
$56
1.8%
6
14
Frankfurt
$54
0.0%
10
17
Los Angeles
$45
-2.2%
22
18
Dubai
$44
0.0%
10
19
Taipei
$41
0.0%
10
20
Madrid
$39
0.0%
10
22
Manila
$33
0.0%
10
21
Seoul
$30
0.0%
10
23
Kuala Lumpur
$23
-0.8%
20


WHAT USD 100 MN COULD BUY?

·         More than half a million sq.ft of prime office space in Bengaluru, the highest in the world

·         Delhi emerged as the most expensive office market in India on the ‘What USD 100 mn could buy?’ index followed by Mumbai

Ranking
City
Sq.ft
1
Hong Kong
11,698
2
Tokyo
31,282
3
Paris
36,662
4
Zurich
43,754
5
London (City)
43,899
6
Singapore
48,389
7
New York
56,534
8
San Francisco
62,543
9
Dublin
65,717
10
Frankfurt
75,632
11
Sydney
76,280
12
Berlin
85,170
13
Amsterdam
96,762
14
Beijing
99,563
15
Madrid
105,730
16
Shanghai
115,657
17
Los Angeles
131,857
18
Boston
134,977
19
Washington DC
135,602
20
Melbourne
136,905
21
Seoul
140,608
22
Miami
156,073
23
New Delhi
156,304
24
Brisbane
157,225
25
Seattle
157,381
26
Mumbai
163,032
27
Austin
172,158
28
Chicago
204,604
29
Bangkok
229,244
30
Dallas
247,219
31
Manila
290,201
32
Pittsburgh
327,225
33
Kuala Lumpur
445,739
34
Bengaluru
512,385



EMPLOYMENT AND PROPERTY COST INDEX

·         Bengaluru emerged as the most valued destination on the Employment and Property Cost Index with total cost (salary + property) of USD 1,264,000

Table: Cost to a firm (salary and property costs) of employing 100 people in a City (US$ per annum)
Rank
City
Total cost (salary and property)
1
Zurich
$7,947,260
2
New York
$6,938,000
3
San Francisco
$6,696,700
4
Hong Kong
$5,964,990
5
Boston
$5,936,820
6
London (West End)
$5,605,660
7
Sydney
$5,022,190
8
Tokyo
$4,897,270
9
Chicago
$4,874,730
10
London (City)
$4,850,620
11
Singapore
$4,616,950
12
Paris
$4,115,120
13
Dublin
$4,051,670
14
Stockholm
$3,998,790
15
Frankfurt
$3,814,610
16
Amsterdam
$3,522,130
17
Warsaw
$1,631,670
18
Cape Town
$1,626,900
19
Bengaluru
$1,264,000


HOW RISING INCOMES SPENDS WOULD INFLUENCE THE SHAPE AND CONTENT OF URBAN ENVIROMENTS

·         Bengaluru and Mumbai top the chart among 10 future cities in terms of eating out spends
Forecast in (%) in spending on eating out between 2017 and 2027
Bengaluru: 176.9%
Singapore: 35.2%
Mumbai: 136.7%
Hong Kong: 33%
Shanghai: 97%
Austin: 26.4%
Beijing: 96%
Dubai: 22.1%
Nairobi: 82.8%
Sydney: 19.6%
Source: Oxford Economics Knight Frank Global Cities: The 2018 Report



·         Bengaluru and Mumbai feature among the top 5 future cities in terms of households with significant incomes

Forecast growth in households with an income of USD 35,000–USD70,000 between 2017 and 2027
Shanghai: 153%
Dubai: 48%
Bengaluru: 144%
Austin: 18%
Beijing: 133%
Singapore: 16%
Nairobi: 110%
Hong Kong: 15%
Mumbai: 67%
Sydney: 7%
Source: Oxford Economics Knight Frank Global Cities: The 2018 Report

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “The Global Cities: The 2018 Report offers a bird’s-eye view into the future of the most state-of-the-art world cities. Our spaces are being redefined. And, one of the most disruptive facets of the change in spaces where we work, live and the overall urban ecosystem would be acquisition of talent.  Organisations would have to thoughtfully handpick global cities, zoom into smart office locations within them and tastefully shape these spaces in sync with the fascinations of the crème-de-la-crème workforce making the world work today. And, it is needless to state that the evolution would be driven by technology and smart intelligence.”

According to Dr. Samantak Das, Chief Economist & National Director – Research, Knight Frank India, “Desires of the talent pool and rising disposable incomes are set to shape our urban environments in the near future. Global cities that are aspirational and successful in encapsulating an inherent wow factor are set to see the most dramatic transformation. We have already seen glimpses of the transformation with a shift in the expectations of mainstream occupiers. Today we see that the office space expectations of mainstream occupiers resembling those of niche sections such as the Start-up fraternity or the Googles of the world. The global trend holds true for select Indian cities such as Bengaluru and Mumbai.”

Viral Desai, National Director, Occupier Solutions Group, Knight Frank India, added, “India’s office market witnessed a stellar run in 2016 as compared to the recent past. It is also a fairly accepted fact that India is home to some of the most affordable Central Business Districts in the world. The findings of the Global Cities: The 2018 Report reinstates the fact. Bengaluru’s Whitefield is a case in point. Despite the influence of global headwinds on mainstream occupiers, emerging trends such as Co-working space providers have continued to whip up demand in the supply-deprived market.”


About Knight Frank
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 15,000 people operating from 413 offices across 60 countries. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit www.knightfrank.com.

In India, Knight Frank is headquartered in Mumbai and has more than 1,000 experts across Bangalore, Delhi, Pune, Hyderabad, Chennai, Kolkata and Ahmedabad. Backed by strong research and analytics, our experts offer a comprehensive range of real estate services across advisory, valuation and consulting, transactions (residential, commercial, retail, hospitality, land & capitals), facilities management and project management. For more information, visit www.knightfrank.co.in.


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