As per a global report, India is the investment darling when it comes to office space and provides better return in comparison to its peers. The cap rate or yield which is an assessment of the real estate in terms of profitability and possible return has been 8.8% for India. This is owing to a favourable supply factor for investors in the space.
“India’s office market offers some of the best returns for investors with over 8% yield, based on the fact that the underlined demand – supply dynamics are favourable for investors. This is demonstrated by the fact that 4 out of 8 office markets have single digit vacancy levels underscoring the strength of this segment,” said Sharad Agrawal, Executive Director – Capital Markets, Knight Frank India.
Notably yield on a property is measured over a time period of over one year and assumes the property is purchased on cash basis and not on loan.
The other countries of the Asia Pacific region that were covered include China Tier 1 (4.4%), Seoul (4.8%), Hong Kong (2.3%), Tokyo (3.9%), Philippines (5.9%), Thailand (7%), Malaysia (6.5%), Indonesia (6.5%) and Singapore (4.1%) amongst others.