Demand For Office Space Drops In Mumbai Real Estate Market Driven By Bfsi Sector

Mumbai known as the Financial Hub of India one of the expensive city

. Commercial property in Mumbai real estate market, the demand is slowed down in the first quarter of 2012, around 4.1 million sq ft getting absorbed across the leading cities in the country. Previous quarter October-December 2011, almost 6.5 million sq ft was absorbed. The leading cities such as NCR (National Capital Region), Mumbai, Bangalore and Chennai were accounting for more than 70% of the entire office space getting absorbed in the country.

Almost 5.9 million sq ft of commercial property of Mumbai was added and continued to overtake demand in the first quarter of 2012. Comprising almost 90% of the entire quantum of the present quarter the new supply was largely concentrated in NCR, Mumbai, Bangalore and Chennai.

As today, Mumbai witnessing decline in rental values at Nariman Point and Lower Parel due to sluggish demand levels. Rental in Grade A buildings in Nariman Point dropped from Rs. 300 sq ft a month in December last to Rs. 290 in March. Lower Parel reduced from Rs. 155 to Rs. 150 in the period. Lower Parel anticipated that supply dynamics will continue to dictate rental movement in coming quarters with values in the CBD being stable and those in suburbs slipping. As Nariman Point has stated the limited transactions with only a marginal absorption of around 10,000 sq ft. Nariman Point didnt witnessing the addition of any fresh supply in the present quarter and vacancy remained stable. In coming quarter the vacancy in micro-market is slated for rise from the current estimated 6-7%.

In Mumbai the marginal decline was seen in rental values during the quarter. Near about 2 Lakh sq ft of Grade A office space became available in the Extended Business District (EBD) of Lower Parel and also saw a marginal correction of 1-3% in rental values in location Worli and Prabhadevi. Decline was largely due to low levels of transactions. The CBRE report also observed limited leasing activity in Secondary Business District (SBD) of Andheri, Vile Parle and Jogeshwari locations. BKC (Bandra Kurla Complex) continued to remain a preferred location for corporate occupiers looking for expansion.

As Mumbai continues to be BFSIs favourite as compared to other metros. Mumbai being the primary driver of commercial office space in real estate in Mumbai BFSI (Banking Financial Services and Insurance) followed by IT/ITES, Healthcare and infrastructure sectors. BFSI is concentrated in the key business districts of Nariman Point, BKC (Bandra-Kurla Complex) and Lower Parel.

Being the BFSIs favourite the occupiers indicated willingness to cut the cost of occupation, they seemed highly unlikely to compromise on the quality of commercial property in Mumbai infrastructure. Half of the occupiers indicated that they want to lease Grade A buildings only. The slowdown continues in Mumbais commercial property market.

Many corporate companies do not want to compromise on quality of real estate. Corporate companies are very keen on efficiency of building and Grade A real estate. Once the location has been identified the next step in the process of finalizing commercial property is building selection. The efficiency of building is the most important followed by Common Area Maintenance (CAM) charges. The higher the efficiency of the building the better it is for the occupier as it gives them more usable area.

by: lokeshmanu24

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