MNCs looking to set up a base of operations in India would do well to look at Chennai, as the city has the lowest office rental rates among any of the big 4 metros in India. But the city also witnessed faster appreciation in rental values during the year ended December 2012 vis-à-vis more expensive cities like Delhi and Mumbai,  as per real estate consultant Jones Lang Lasalle’s latest “The Office Index” report.

In terms of the capital value of property as well, Chennai was ranked lower than the other three big metros, making outright purchase of an office space a more feasible prospect.

According to the report, expansion by MNCs remained slow in India and China during the fourth quarter of 2012. The office market in general was in favour of landlords, but corporate occupiers have become increasingly reluctant to pay high rents.

Consequently, rental growth is likely to be limited in most markets. But capital values are expected to increase faster than rent in many markets, supported by solid investor interest.

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