Commercial Property Rentals Set to Descend in Major Cities

May 4, 2007	(Be the first to rate this story!)  Loading ...
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According to the data showcased by international property consultant, DTZ, Major Indian cities are witnessing a sharp fall in commercial property rentals. Rising real estate costs may put off a number of multinational companies desiring to set their establishments in India.

Also, the report has forecasted an oversupply in the commercial property segment to take place in some cities, of which, Pune and Chennai are put on top of the chart with an expected oversupply of 68% and 66% respectively.

Interestingly, the report excludes Mumbai from the list of the cities which are likely to witness oversupply. Here, demand will lead supply, not vice versa. This may cause the rentals in certain elite sectors to slip by 25%.

The Whitefield area of Bangalore and some IT known areas like Hinjewadi or Baner in Pune may see such a situation soon, says Balaji Rao, Managing Director, Starwood Capital India Advisors.  The same can be predicted for Old Mahabalipuram area as well, he further adds.

There is much supply which will suddenly come up thereby losing its pace with the ongoing demand. This will bring a drop in prices of commercial properties taking a long period to completely rent out.

The seemingly unquenchable thirst of IT/ITes segment to foray into India has brought a plethora of opportunities for property developers who will never want to give up the chances to go on an overdrive and develop more spaces than what is actually required.  For that reason, the IT/ITes segment is said to see the anticipated supply in near future.

Oversupply will hit the market when Special Economic Zones (SEZs) finally take off and the situation may put pressure on developers of non SEZ IT space to negotiate harder to get their space leased out.

News Published Under:   Real Estate India |

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