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Indian Real Estate News
Kolkata scores big in office rental
Source: The Times of India Feb 20, 2014
The Dalhousie-Park Street neighbourhood has something new to brag about. It is going through one of the steepest spikes for office rental charges in the Asia Pacific region. The city, lagging behind on many parameters, is competing with the most sought-after locations like Jakarta, Bangkok, Singapore, Seoul and Shanghai on this front.

Scarcity of premium space in the central business district of Kolkata has pushed up competition, resulting in a growth by 4.35% in office rental charges. A recent study by Cushman & Wakefield, one of the largest privately held commercial real estate services firm, showed that the growth in rental charges for office spaces in Kolkata was the tenth highest in the Asia Pacific region.

Central business district in Kolkata has expanded beyond Dalhousie and Park Street to Theatre Road at present. Despite a gradual expansion, supply of office space did not match the demand. It increased especially after companies in areas like banking, insurance, investment and consultancy started opening their offices in the city. In terms of rental growth, Kolkata is almost on a par with global hot spots like Auckland and Shanghai.

But what is driving the growth in demand in premium localities in the city? "Kolkata CBD recorded the highest rental growth in India at 4.35% in 2013 driven by the positive demand from sectors such as BFSI, services and consulting," said Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield. According to him, many older office spaces are now going for renovations to enhance the quality of office space offered. That has also helped to increase the demand and command better rental charges.

"In last one year some of the companies in sectors like insurance, investment and banking have made their foray in the city, while some have expanded. Although demands in the area increased, there is not much real estate development in CBD," said Harsh Vardhan Patodia, president of CREDAI Bengal.

Moreover, growth of retail in the area has also added to the demand. "A lot of brands in spheres like fashion, accessories and IT have opened up shops here," Patodia said. The realtors in the city estimate that rental in the CBD area at present is ranging between Rs 90 and Rs 120 per sq ft per month and most of the demand is for office space between 5,000 and 15,000 sq ft.

More interestingly, CBD area in Kolkata is the fourth most expensive locality in terms of rental charges. "The upward movement could be witnessed in last six months. A lot of smaller companies are also setting up offices in the area. They use Kolkata as the hub for their business in the north-east or even SAARC region," said Sushil Mohta, managing director of Merlin Group.

The report has found that while rental growth in New Delhi and Mumbai have flattened and Bengaluru has shown a negative growth, Kolkata has shown a rise in demand. In fact, rental charges for CBD areas in Bengaluru are much lower than that in Kolkata.

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