Performance indicators of office & rental spaces, in major cities
Leasing in Mumbai’s Grade A office market gained momentum in 3Q09, primarily due to fresh opportunistic demand from occupiers aiming at securing leases at current rationalised rental prices. The market has also witnessed increased interest from occupiers interested in purchasing real estate, rather than leasing space. The city witnessed net absorption of about 231,860 sq ft (21,541 sq m) in operational buildings in the CBD and SBD.
The overall vacancy rate declined to 7% in 3Q09 from 8% in 2Q09. However, there were no notable signs of a recovery in demand from the IT/ITES sector. On the issue of supply , Mumbai is expected to witness high vacancy levels in the near future due to the completion of projects with poor pre-leasing . In terms of asset pricing, Mumbai’s commercial real estate market is stabilising. Rental declines continued to moderate in 3Q09, correcting between 3-6 % across the prime micro-markets . Capital values also declined, albeit at a slower rate compared to rentals.
In the retail segment, only a few negotiations are being realised as lease transactions. The city’s retail market achieved net absorption of about 341,582 sq ft (31,734 sq m) in 3Q09 on the back of new supply. However, net absorption failed to match supply additions of 600,000 sq ft (55,742 sq m) and the overall vacancy rate rose to 18.1% in 3Q09 from 16.7% in 2Q09. The decline in retail rentals across Mumbai has slowed in 3Q09, with the city witnessing a q-o-q rental correction in the range of 4-7 %. The revenue-sharing model is being widely accepted by developers in Mumbai who offered resistance earlier.
More : economictimes.indiatimes.com