Mumbai has become the fourth costliest city in Asia Pacific for renting a office in the last quarter of 2010 with cost higher than even places like Shanghai, Seoul and Sydney, according to Jones Lang LaSalle.
The global realty consultant Jones Lang LaSalle (JLL) said that India's capital is also not far behind, occupying the 10th spot in the list of 26 cities across the region.
The top three costliest cities are Hong Kong, Tokyo and Singapore, where average annual rents at the most expensive locations stood at USD 1,511, USD 752 and USD 747 per sq mt during the quarter.
While the average annual rentals of Mumbai during the quarter has been estimated at USD 705 per sq mt, the same has been found to be USD 503 per sq mt for Delhi.
Bangalore was ranked 24th and Chennai at 26th with average annual rentals of USD 136 per sq mt and USD 124 per sq mt respectively.
The report further said that with fundamentals of economic growth being very strong in the region, rentals are likely to strengthen in the coming period.
"Consistent with strong fundamentals, we expect leasing demand to remain solid and vacancies to generally trend down over the next few quarters," JLL said.
Rental growth of up to 30% is expected across the region this year, with the strongest growth likely to be seen in supply constrained markets, it added.
During the October-December quarter of 2010, rentals in Mumbai, Delhi and Bangalore increased by 3.2%, 3.6% and 5.6% respectively over the previous three-month period.
In another survey, the consultant said that Mumbai saw highest space utilisation in the year in fourth quarter, indicating a robust demand.
"Demand for Grade A office space was broad-based and not restricted to the banking, financial services and insurance (BFSI) sectors, which typically dominate Mumbai's tenant landscape," it said, adding other sectors such as aviation and IT/ITES were also active during the period.
As on December 31, 2010, the total operational office spaces in Mumbai's prime locations stood at 39.1 million sq ft (3.63 million sq mt), with an overall vacancy level of 11.5%.