Commercial rentals on top, due for correction

September 21, 2007	(Be the first to rate this story!)  Loading ...
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After being the subject of incessant rally for the past few years, the commercial rentals in nearly all the major cities of India have touched the rooftop, says the recent report from international real estate advisory firm DTZ.

The absorption levels of commercial properties in India are steeping down due in most commercial hubs of these cities such as Delhi, Mumbai, Bangalore, and Hyderabad.

Resultantly, the supply of new office space is far exceeding the levels of demand and since the interest from the side of buyers and tenants is reportedly falling, the vacancy levels at the new commercial property projects are quite high.

The vacancy levels in Central Business District (CBD) of Bangalore at MG Road is recorded at 5-7 levels, however the commercial area of Whitefield in the city has been witnessing shivering 35 per cent vacancy rates. The reason is obvious-No takers for the new office space.

Similar is the scenario with Delhi. Only 0.54 million of newly-constructed space was taken up in the second quarter of this year, against the total supplies of 0.81 million sq. ft of area.

However, there is an astounding difference between the average rental values of CBDs in Delhi and Bangalore. The same at Delhi is hovering at Rs 300 sq. ft whereas in Bangalore the same is at Rs 90 sq. ft.

Commercial properties in Pune are also projected to suffer a huge gap in supply and absorption levels by the end of 2007. By the end of the year, Pune real estate will add some 9.7 million sq. ft of space however the demand is estimated to be in the range of 5-6 million sq. ft.

Real estate Chennai also just managed the absorption levels of 0.47 million sq. ft against the huge supply of 3.4 million sq. ft.

In view of such scenario, the markets are most likely to head for correction in the near future.

News Published Under:   Real Estate India |

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