Mumbai, along with Bangalore and Chennai, dominated the office transaction activity in the Jan-Mar 2013 quarter. However, leasing activity declined as did rental values, reflecting the economic sentiments prevailing in the country.
A CBRE report says that office space transactions slipped by six per cent to approximately 6.6 million sq ft in the Jan-Mar 2013 quarter against 7 million sq ft in the Oct-Dec 2012 quarter. “Occupier focus continued to be on consolidation and more efficient use of their existing portfolio. Rental values continued to witness a downward pressure across micro markets as occupier expansion faced cost pressures”, says the report. CBRE anticipates a downward pressure to persist in most markets in the short to medium term.
Data with Magicbricks.com also shows that the rental price of commercial properties in over 90 per cent of the areas tracked in Mumbai experienced a decline in the Jan-Mar 2013 quarter. Capital values also slipped in areas such as Nariman Point, Bandra Kurla Complex (BKC), Borivali East and Chembur.
The Jan-Mar 2013 quarter analysis of pan India office space supply distribution shows that 45 per cent of supply came from Mumbai, followed by Bangalore and Chennai, both at 19 per cent each. The CBRE absorption distribution data for the same period shows that Bangalore accounted for 35 per cent of absorption, followed by Mumbai (28 per cent) and National Capital Region (16 per cent).
The Central Business District of Mumbai continued to witness subdued demand from corporates. “A meager 10,000 sq ft of absorption was witnessed in the micro markets of Nariman Point, Fort and Cuffe Parade during the same quarter. Rental values continued their downward trend and have declined by 3-4 per cent quarter-on-quarter”, said the report.
According to Pankaj Kapoor, MD of the research firm Liases Foras, “There is a rising desperation among developers to dispose off commercial property since the segment is going through a distressing phase”.
Sanjeet D Narain, MD, Narains Corp, a Mumbai based property consultant and realtor firm says, “It was a slow quarter for the Mumbai commercial real estate market. Several markets saw higher supply and there was a pressure on both capital and rental values. During the Jan-Mar 2013 quarter rental values slipped by up to 30 per cent while capital values corrected by over 10 per cent in several markets”.
As supply outstrips demand in major active commercial pockets like BKC, prices are definitely not going up. This is good news for companies looking to scale up their commercial presence in the financial capital.
Ajay Modi , MagicBricks.com Bureau