Office fit-out costs across India increase by 4.5% Year-on-Year: JLL

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The average office fit-out costs across India increased by 4.5% with the average fit-out cost per sq ft rising to 5,788 from 5,546 last year. Mumbai continues to be the most expensive city in India for office fit-outs at an average of 6,588 per sq ft followed by New Delhi at 6,068 per sq ft. Tokyo claims the top spot in Asia Pacific, as per JLL’s Asia Pacific Fit-Out Cost Guide 2023-2024.

Mumbai continues to be the most expensive city in India for office fit-outs at an average of <span class=
Mumbai continues to be the most expensive city in India for office fit-outs at an average of 6,588 per sq ft. (Pratik Chorge/HT Photo)

The cost to fit-out workplaces in India continues to rise, mirroring ongoing inflationary pressures, higher commodity prices and increased construction costs, according to global real estate consultant JLL’s Asia Pacific Fit-Out Cost Guide 2023-2024.

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JLL’s APAC fit-out guide details the nuances of cost variations across regions, mapping construction price shifts, outlook for capital procurement activities, strong client sentiment and ESG commitments gaining prominence.

“In 2023, a year marked by global headwinds, the annual numbers for gross leasing in India’s top seven markets crossed the significant 60 million sq ft milestone for the first time. This solidifies India’s position and firmly establishes its credentials as the ‘office to the world. We anticipate this momentum for Grade A office demand to continue in 2024 with new entrants to the country, especially in the GCC and new tech sectors,” said James Jipu Jose, Managing Director, Project & Development Services (PDS), India, JLL.

Despite a 4 to 5% rise in construction prices, there is confidence within the India market as flight-to-quality remains a theme. India’s supply-chain performance has improved significantly over the last two years, coping better to the global disruption, and varying regulatory frameworks. Largely, input costs have decreased due to reduced global raw material prices, however increasing labor costs remains set on an upward trajectory.

Also Read: Commercial real estate market has the potential to increase REIT market size over 6 times: ICRA

“This industry is also making efforts to modernize and streamline the supply chain to enhance efficiency and competitiveness. And with average fit-out cost across all 7 major cities remaining much below the regional average, it makes India a strong market for global companies and investors,” he said.

“While inflation in Asia Pacific markets is returning to normal levels as widely projected, certain supply chain challenges remain for mechanical, engineering and plumbing, information technology and audio-visual items. Going forward, we foresee factors like commodity prices, energy costs, and wage increases continue to impact pricing, lead to delays for some fit-outs and unpredictability of selection items into Asia Pacific,” said Martin Hinge, Executive Managing Director, Project Development Services, JLL Asia Pacific.

Also Read: Barclays leases over 64,000 sq ft of commercial space for 5 years at a monthly rent of 2.08 crore per month in Mumbai

Sustainability remains top of mind for corporates

Leasing office space in sustainable buildings is becoming non-negotiable for occupiers committed to ESG. Among other factors, sustainable fit outs are gaining prominence as an initiative to decarbonise workplaces. In a survey of 240 CRE leaders across Asia Pacific, one-in-two cite sustainable fit-outs as a priority to be actioned within the next three years. This confirms that sustainability is now a key driver in the way occupiers acquire, fit out, and manage their assets.

Also Read: Share of green office leasing touches 16% in 2022-2023; Global Capability Centres account for 76% of overall leases

Responding to inflationary pressures that projects are facing, one-third of JLL market leaders in Asia Pacific report that pursuing a sustainable design is dependent on the overall project cost. 56% also confirmed that reduced CAPEX on initiatives was being considered to work within budgets, the bulk of which was in Australia and Southeast Asian markets.

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