Jones Lang LasSalle (JLL, one of the top notch property consulting companies) represents the state of the real estate market in various cities by plotting them on the circumference of a circle and it has popularized it as property clock:
Twelve o’clock represents the market peak, six o’clock the bottom. Each city strictly moves around the circle in a clockwise fashion and its position represents the condition of its real estate market.
In the following article we will understand office rental movements for India and China over 5 quarters-
Global Office Rental Clock – Q3 2018
Global Office Rental Clock – Q4 2018
Global Office Rental Clock – Q1 2019
Global Office Rental Clock – Q2 2019
Global Office Rental Clock – Q3 2019
Tracking rental values over last 5 quarters for Delhi & Mumbai, we find that office rental values have stayed in the ‘Rental Value Growth Accelerating Pie’ while rental values in Shanghai have fallen into the ‘Rental Values Falling Pie’.
The last 5 quarter trend of the office rental clock gives confidence that India can attract capital for construction and development since the rental values are accelerating and this acceleration in the office rental values has sustained for duration of 15 months now.
However; we should also remain skeptical of the trend as it can reverse without warnings, as it has happened for Shanghai in the same period.
In two quarters, namely, Q3 2018 and Q4 2018, shanghai fell into the ’Rental Value Growth Accelerating Pie’ and in the subsequent quarter it leap frogged into ‘Rental Value Falling Pie’ bypassing ‘Rental Value Growth Slowing Pie’.
India’s accelerating rental value growth should continue to catalyze steel and cement demand for the foreseeable future and many other related sectors to construction and development.
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