Sharp Drop in Kolkata Office Rentals

November 4, 2009	(Be the first to rate this story!)  Loading ...
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If you had any doubts about new business ventures giving Kolkata the miss, here’s damning proof that should send the alarm bells ringing loud and clear. Vacancy levels have shot up with nearly a quarter of the available office space finding no takers between July and September. Though office space across the city has been hit by the poor business sentiment, peripheral locations like Rajarhat and Salt Lake are the worst affected with the IT and ITeS industry giving the city a cold shoulder in recent months. Significant infusion of new supply has also accentuated the problem in this belt, leading to a sharp drop in rentals.

Global real estate solutions firm Cushman & Wakefield, which researched on office space, expects the current situation to persist, triggering a further rise in vacancy levels. “There will be a prolonged situation of over-supply unless significant space uptake occurs in the market. Due to the current trend of low demand, there may be deferrals in certain projects to later periods,” a researcher said. Rentals of office space for both corporates and IT/ITeS firms in Rajarhat have nosedived by a whopping 31% in the July-September 2009 against the corresponding period last year. In Salt Lake, IT/ITeS space rentals has crashed by 29%. Corporate space in Sector V is slightly better off with rentals taking a 22% dip.

But what comes as a shocker is the steep fall in office space rentals in the heart of the city. At BBD Bag the city’s commercial hub and central business district rentals have tumbled by 26% despite no addition in supply. At Park Street and Camac Street, rentals have slipped by 18%. It is down 20% along Park Circus connector and 19% along the Rashbehari connector. While the current political flux in the state and loss of big-ticket investments has made Kolkata a less-favoured destination than it was a year ago, the turnaround in the economy following last year’s downturn is yet to impact the IT/ITeS sectors that have displayed the largest appetite for office space in the past.

The phenomenon though, isn’t restricted to Kolkata. And it is the central business district (CBD) in each city that has been the worst hit. In the National Capital Region, comprising Delhi, Gurgaon and Noida, the vacancy rate was pegged at 11-12% while rental values saw a downward correction of 37% in CBD to 21% in Noida. In Mumbai, the rentals dip ranged from 11% in Thane Belapur Road to 42% in Lower Parel and Bandra. In Worli, the dip was 38-40%. In Chennai, the CBD at Anna Salai saw rentals for corporate offices drop by 29%. At Alwarpet in T Nagar off CBD, the rental drop was 23-27%.

News Published Under:   Kolkata |

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