News: Commercial property rentals in tier-1 cities still rising

(BL 27/04/2007) New Delhi - Rental rates for commercial properties in tier I cities continue to rise, says a CB Richard Ellis report.

"With the Indian IT industry on track to achieve its long-term potential, demand for office space is expected to remain strong in the short to medium term," the report says.

The prime commercial locality of Connaught Place in the Capital commanded rentals of Rs 275 per sq ft per month for grade-A office space in March, up from Rs 250 per sq ft per month from a year-ago period, according to the report.

Similarly, Grade-B office space in Connaught Place saw rentals move up to Rs 175 per sq ft from Rs 150 per sq ft.

The net rent (rent for actual lettable area and interest on the security deposit) in Connaught Place stood at Rs 385 per sq ft and Rs 245 per sq ft for Grade-A and Grade-B office space last month respectively, says the report.

Mumbai's main commercial space locality Nariman Point commanded a rent of Rs 330 sq ft last month, up from Rs 310 a year ago for Grade-A office space. For Grade-B office space, rentals stood at Rs 250 sq ft, up from Rs 225 a year ago. The net rent in Nariman Point was Rs 410 sq ft and Rs 310 sq ft for Grade-A and Grade-B space respectively.

Bangalore recorded marginal increase in rental in the period. The rental for Grade-A space in Central Business District in Bangalore stood at Rs 68 sq ft, up from Rs 66 and for Grade-B at Rs 46 sq ft, up from Rs 44. The net rent for Grade-A and Grade-B space stood at Rs 70 sq ft and Rs 56 sq ft respectively.

Hyderabad did not see significant escalation in rentals either. Grade-A space in the CBD in the City of Pearls stood at Rs 50 sq ft, same as last year. Grade-B space in CBD went for Rs 45 sq ft, up from Rs 40. The net rent for Grade-A and Grade-B space stood at Rs 72 sq ft and Rs 62 sq ft respectively, according to the report.