Slow growth forces realtors to cut rentals by 10-15%

August 13, 2008	(Be the first to rate this story!)  Loading ...
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The commercial real estate market across major cities in India saw a slow performance in the second quarter of 2008. This has forced real estate developers to cut commercial rentals by around 10-15 per cent across India. Mumbai, the commercial capital, witnessed stagnant rental values, while Delhi saw a strong correction after the IT/ITeS industry, the largest consumers of commercial real estate, deferred their expansion plans on fears of a global meltdown.

ET on June 17 had reported that commercial rentals across India have started to fall. The total demand for office space during the second quarter of 2008 was 9.74 million sq.ft while the supply was recorded at 18.07 million sq feet. Micro-markets such as Noida in NCR Delhi, Rajiv Gandhi Salai in Chennai have recorded excess supply for this quarter thus increasing overall vacancy rates, Cushman & Wakefield states in its latest report.

Relatively smaller areas such as Chakala, Marol and Saki Naka near Andheri in Mumbai, where the outsourcing industry is stationed, rentals have fallen from 175-275 per sq. feet to 125-225 per sq. ft in the past six months. NCR also battled with issues of oversupply as the average vacancy rate increased in the quarter. Demand for the quarter was registered at 3.3 million sq.ft against the supply of 4.3 million sq.ft. Supply in the region was dominated by the IT/ITeS industry which accounted for 60% of the total supply.

Noida witnessed the highest vacancy rate of 15 per cent. The supply mismatch in the IT/SEZ segment was reflected through rentals which witnessed a correction in the quarter. The total supply for Mumbai in the second quarter was 4.09 million sq.ft with IT/ITeS specific supply estimated to be 40% of the total. The city recorded a demand of 1 million sq.ft largely driven by absorption with fresh pre-commitments taking a backseat resulting in an overall vacancy of 5 per cent in the quarter. Thus the developers had no option but to cut rentals.

News Published Under:   Real Estate India |

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