Commercial Market Review Mumbai – June – August 2009
Residential Market Review
Current Scenario/Trends
- The Mumbai commercial market went down by nearly 40% in the year 2008 after reaching
peak lease rents in the year 2007. The lease rent values are still low and in turn
good for corporations looking to set up offices in Mumbai.
- The demand for A and B Grade office spaces is back, however, the volume of transactions
is still low and there is ample office space availability in the market. Most of
the demand is in the offices sizes of around 2000- 5000 sq.ft.
- The property owners in Mumbai have reconciled a lot to the current market and the
global market scenario and re-negotiated with their existing tenants at fair market
values and moved on and hence we have seen that even the client is out in the market,
he is negotiating parallel with his existing property owner and the moment the owner
knows that he is moving out he comes forward to negotiate.
- Each month an owner looses rent is approximately 8% equivalent to the yearly rent
and hence it makes pure commercial sense to reduce and carry on.
New office Blocks
-
There are a lot of properties getting ready for fit outs in the A and B Category
section. There is close to 80 Lacs sq.ft (nearly 8.00 Million) sq.ft to be ready
by the end of this year. A lot of these projects are earmarked for the IT and ITes
Industry and hence a little over stock is expected in this sector which still is
struggling to off take further as a lot of large MNC’s are already settled in Mumbai
and the new entrants are looking at various other cities in India to subsidise the
costs as Mumbai still ranks in the Top 15 most expensive cities to live in.
-
247 IT Park, Ventura, The Cube, Everest IT Park 2, Wadia Plaza, Rustomjee Natraj
at Andheri Kurla Road and Kaledonia by HCC, Hiranandani Constructions, Everest Group,
Bombay Dyeing, Rustomjee Developers and HDIL.
-
Suburban locations like Thane and Navi Mumbai has exceptionally good quality stock
coming up and the only problem they are facing is because of large floor plates.
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Infrastructure Impact
-
With the opening of the Bandra Worli Sea Link, the connectivity to Worli and Lower
Parel has surely improved. Hence, the rates will be stable in this location now
and there is movement seen in Bandra Kurla Complex. Although, from the perspective
of efficiency of useable office s spaces most of the new blocks offer around 65%
efficiency.
CBD’s in Mumbai
- The Southern Part of Mumbai which is Nariman Point, Fort, Ballard Estate, Opera
House the prime CBD and the Financial hub with the Banks, Stock Market, Shipping
and the Bullion Traders
- TheWorli – Lower Parel belt has the Ad agencies, Corporates and Pharma Cos.
- Bandra Kurla Complex is dotted with independent and wholly owned buildings by
Banks, National Stock Exchange large MNC’s have their offices here, the Maker City
holds offices of Volkswagen, Nomura and numerous other large companies.
- Santacruz East – Kalina – Another large commercial office location with the Grand
Hyatt right next to it, buildings like Windsor, Raheja Plaza, Trade Centre, Synergy
are the best here.
- Andheri – Kurla belt – One of the most populated belt offering office spaces from
300 sq.ft to an independent building of 300,000 offers something for everyone at
affordable prices and good connectivity to most of the Western, Central, Eastern
and Navi Mumbai
- Goregaon- Malad – Hub of the IT industry in Mumbai with Call centres and back
office ops going down well in sprawling IT Complexes. The finest building in this
location is the Oberoi Commerz.
- Mulund-Powai-Vikhroli Belt – Most surprisingly upcoming belt offering quality
spaces in the offices arena in reasonable prices.
- Thane – The emerging IT and ITes destination, however, it is yet to come up and
by the year 2010-11, Thane should have more than 30 Million Sq.ft of office spaces.
- Navi Mumbai – Stretching from Airoli to Belapur CBD, Navi Mumbai has a mix of
activity in each sector, large companies like Reliance have their head offices planned
there.
Outlook
The next quarter outlook is very interesting for the Mumbai market, with the new
Government and new reforms and better policies coming up, the long term growth is
for sure as one can see. With a lot of global markets which have announced that
they are out of recession now, means, that the companies who were waiting to expand
and grow will take a call in these 3-6 months and decide on new operations etc.
There is ample demand in the market for outright purchase by companies who have
long term operations in Mumbai. As per an estimate 100 months rent is equivalent
to the value of the property and it makes sense for the companies to purchase property
in case they are here for a long term in Mumbai.
There is still shortage of small quality office spaces in Mumbai all around which
HNI’s want to use for their personal use or investment propositions to lease out
etc.
The ambiguity on the property taxes still is a problem area and a lot of time is
wasted in each transaction ascertaining the correct property taxes in the present
day market. The new tax system which will be based on Capital values of the properties
in Mumbai is likely to come into force from April 2010, however, there is no formal
conclusion on this.
Disclaimer – The information and outlook given herein are general and the data is
compiled through various sources in the real estate industry.