Mumbai’s central business district will generate the highest returns from investments in commercial property, while the National Capital Region (NCR) will lag, despite being India’s largest office market, a report by real estate consultant Knight Frank has found.
While Mumbai’s central business district tops the report with 19% return per annum, Delhi NCR’s business districts feature at number 6 with 11% return.
Mumbai is followed by Hyderabad, Pune and Chennai in terms of returns.
The NCR is India’s biggest market in terms of office stock with 110 million sq ft, of which 88 million sq ft is occupied, the report titled Top Business Districts in India to Invest In said.
The report ranked 33 business districts across the country on the basis of investor returns over the next five years.
While IT dominates Bengaluru and banking, financial services and insurance (BFSI) remains significant for Mumbai, NCR has a more diversified demand for office space. Better infrastructure and availability of manpower are also adding to NCR’s advantage.
The six main cities surveyed — Mumbai, Hyderabad, Pune, Chennai, Bangalore, Hyderabad and NCR — boast of 196 million sq ft of office space with absorption of 173.5 million sq ft.
“The strength of a city’s office market is dictated by factors such as availability of talent pool, quality infrastructure, domestic and global connectivity and favourable government policies,” said Samantak Das, chief economist and director, research and advisory services, Knight Frank India. “In terms of office stock, NCR is the biggest market in the country and the peripheral business district Gurgaon Zone A (that comprises markets such as MG Road, NH 8 Golf Course Extension Road), Noida and Greater Noida would provide the best investor returns in the city during 2013-2017.”