Bengaluru, December 2022: Knight Frank, a leading international property consultancy, in its latest report ‘Asia – Pacific Outlook 2023’ encapsulated outlook for real estate asset classes – residential, commercial and warehousing market for Bengaluru city amongst the 24 markets in APAC region. There were total of 3 Indian cities covered in the report, other two being – Mumbai & New Delhi. On the aspect of residential outlook, Bengaluru has been highlighted as 2nd best market to watch out for amongst the APAC cities in 2023. Bengaluru’s residential price is expected to grow by up to 5% YoY in 2023, highest amongst the leading three Indian markets tracked in the report. In regards with the commercial market outlook, Bengaluru’s prime office rental is expected to grow in the range of 5%-7% YoY in 2023, highest amongst the 24 APAC cities tracked in the report. The outlook for the warehouse market stated that Bengaluru’s warehousing market is expected to register a rental growth in the range of 5% to 7% YoY.
APAC Outlook 2023: Residential Market
On the aspect of Residential Outlook, price in Bengaluru market is expected to grow by up to 5% YoY in 2023, highest amongst the leading three Indian markets tracked in the report. Consistent growth of start-ups and unicorns coupled with rising income levels makes the Bengaluru city a strong market in the APAC region. The report further cited that Mumbai’s residential price is expected to grow by up to 4% YoY in 2023. The residential price in New Delhi is expected to grow in the range of 2% – 3% in 2023.
In regards with the APAC residential outlook, Singapore leads the residential market outlook for 2023, ranked number one market to watch out for in the APAC region. Better economic prospects and steady inflow of talent to be the key factors for the optimistic forecast of the city. Bengaluru has been positioned as the 2nd best market to watch out for amongst the APAC cities in 2023. Tokyo positioned as the 3rd best APAC market, remains popular due to its resilient and defensive nature.
APAC Outlook 2023: Office Market
While the market balance is tilted toward the tenant across the APAC region, it remains balanced in the Indian markets. The steady performance of the Indian office markets seen in 2022 is expected to sustain in 2023. Bengaluru’s prime office rental is expected to grow in the range of 5%-7% YoY in 2023, highest amongst the 24 APAC cities tracked in the report. According to the report, New Delhi’s prime office rental is expected to grow in the range of 4%-6% YoY followed by Mumbai in the 3%-5% YoY in 2023. A comparatively strong economic outlook, potentially increased outsourcing from the west due to cost constraints, depreciating rupee making Indian offices cheaper are expected to drive rents in India in 2023.
In regards with the APAC office outlook, APAC region is expected to moderate in 2023 as occupiers seek to optimise overheads and generate savings. Key drivers of leasing demand will continue to stem from professional services, finance and co-working sectors, with the inclusion of flight-to-quality requirements. For the APAC region, key drivers of leasing demand will continue to stem from professional services, finance and co-working sectors, with the inclusion of flight-to-quality requirements. A rapid expansion of co-working footprint in CBDs in line with the shift in preference for flexibility by space users has been observed across the region.
APAC Outlook 2023: Warehouse Market
India is expected to witness the highest logistic supply growth in 2023 in the APAC region. Indian warehouse and logistic market projected to witness the supply growth of 30 mn sq ft, accounting for over one third of the total logistics space expected in 2023 in the APAC region. The APAC region is expected to see approximately 86 mn sq ft of logistic space come online in 2023. Logistics occupiers will continue to commit to build-to-suit solutions and gravitate towards institutional-grade assets. Structural factors will still bode well for the sector in the long run.
On the aspect of the rental market outlook for the APAC region, market fundamentals will render a general balanced logistics market in Asia-Pacific, with rental growth set to moderate compared to the past two years. Australia to witness a rental growth of 12% in 2023, highest rental growth projected amongst the APAC region.
The three leading Indian markets of Bengaluru, NCR and Mumbai are expected to witness a rental growth in 2023. The healthy rent growth seen in 2022 across all markets after years of stagnation, is likely to sustain in 2023. Increasing demand from the manufacturing sector and an expected resumption in space take-up by e-commerce players will drive rents in 2023. Bengaluru’s and NCR’s warehousing markets are expected to register a rental growth in the range of 5% to 7% YoY followed by Mumbai in the range of 4% to 6% YoY in 2023.