Office locations in Mumbai, Delhi among priciest in the world: Survey

While Delhi's central business district, Connaught Place has broken into the top ten list with commercial space rentals increasing 46 percent during the year to an estimated Rs.423 per square foot a month (or $128 per square foot a year), rentals at financial hub Mumbai's posh Nariman Point have zoomed 60 percent to peak at Rs.546 per sq ft per month (or $166 per square foot a year).

Demand for commercial space in these two cities have made rental prices skyrocket making Nariman Point the 5th most expensive office location in the world (previously ranked 7th) while Connaught Place has broken into the top ten (previously rank 12th).

Surprisingly, these two locations are costlier than the most posh office areas in cities like New York, Washington, San Francisco, Rome, Zurich, Shanghai, Dubai and Frankfurt.

However, Mumbai Central has slipped two places to No.7.

In Gurgaon, a part of National Capital Region (NCR), areas like DLF Phase I and office space on NH-8, witnessed high appreciation of 47 percent with rental price rising to Rs.113 per square foot a month.

In Maharashtra, the rental price rose by 33 percent in Central Worli, while in suburban Powai, it zoomed by 80 percent to touch Rs.110 per square foot a month.

"Most micro markets in Mumbai saw an upward trend in rental values largely due to very low vacancy and lack of new supply in these micro markets as projects were delayed. The city saw only approximately 0.45 million square feet of supply in 2007 with it largely being non-IT and essentially absorbed by the banking & financial Institutes, media & insurance," said Sanjay Dutt, joint managing director, Cushman &Wakefield.

According to Dutt, the boom in India's economy that led to corporate expansion has also impacted the market. "However, high rental values witnessed across the country would not be sustainable beyond 12 months given the significant IT supply planned to enter the market in during 2008," he said.

The highest rental growth in India was, surprisingly, achieved by Kolkata's Rashbehari Connector with an increase of 86 percent. However, in spite of the increase, the monthly rental price currently stands at a measly Rs.65 per square foot a month.