Hit by oversupply of office spaces – Lower Parel and Andheri
Behind the glass facade of the swanky new workplace buildings in Mumbai’s Lower Parel space, the sunshine is fading. Several of those buildings, touted because the most coveted piece of property within the country’s money capital, stay nearly half empty despite being prepared for nearly a year currently.
Commercial property in Mumbai here the rentals have currently fallen to virtually one-third down by 36% of what it absolutely was 3 years ago. What was convenient for Rs. 275 per sq ft 3 years ago is currently on provide for Rs. one hundred seventy five per sq ft. Nonetheless there are few takers and despite plunging rentals the areas remains witnessing a building boom. Huge business tower over shanties, cacophonic and slums traffic.
Dozen of tiny retailers, that used to cater to mill staff a number of decades ago are still around , sitting cheek by jowl with gleaming showrooms selling high-end furnitures. The workplace developers who are feeling the pinch of the economic slowdown. Within the past four years, Lower Parel alone has seen launch of 9 major projects with workplace of nearly eight million sq ft, quite the complete Nariman Point, long the hub of Indian businesses. The entire commercial property (office space) in-place at Nariman Point is 6 million sq ft that was absorbed and used over forty years until 2005 that was enough to sustain the city’s business.
Developers Offering Discounts:
Now Mumbai city have total of 85 million sq ft ready and under-construction office space. Does tenants are ready for this kind of supply in the short term? Answer given is ‘no’. Certainly, not at the speed witnessed during 2005-2008 which set the expectation for this breakneck pace of development. As given the oversupply, developers have now lowered rentals while some are also looking at outright sales of building as against leasing them.
Developers stuck with inventory here are ready to offer big discounts in Mumbai Property to attract tenants and buyers. Lower Parel of course isn’t an unusual case. Other places such as Nariman Point and Andheri are also hobbled by poor offtake with rents falling by up to 30%. The only exception is Bandra-Kurla Complex, where rents have risen 40% but experts say the peak may have been attained here.
Although Lower Parel’s problem may be amplified by the sheer size of the oversupply, the scenario is not different across Mumbai. According to property brokers between the year 2003 and 2005 when foreign direct investment started flowing into the economy, the demand for commercial property in Mumbai grew multiple, driving developers to build more.
Resulting the falling values, however comparatively stable capital values. within the quarter ended March 2012 the rental values for grade ‘A’ building in Nariman Point in South Mumbai fell from Rs. 425 per sq ft 3 years ago to Rs. 325 per sq ft a month off its peak of Rs. 450 per sq ft in 2008. However, the capital values here are still at Rs. 33000 per sq ft not terribly removed from peak rate of Rs. 35000 per sq ft.
As of current standing Nariman Point has truly gone down considerably from its peak level as there’s no deal happening in any respect. It’s a frozen market however individuals aren’t writing it off as a ghost market however attributable to its prime residences, connectivity and social infrastructure .
Property consultants and a few developers believe that the incorrect reasonably oversupply has modified the matter. Unless it’s needed for a corporation’s headquarters, tenants don’t would like large floor plates of over 50,000-60,000 sq ft for commercial property. These reasonably floor plates are sensible for an IT company, which generally search for space with around Rs one hundred per sq ft a month reasonably rentals.
Some developers who designed large floor plates are currently gazing reconfiguration of these with splitting them into comparatively smaller commercial property in Mumbai to draw in customers. Except for this, some developers also are giving discounts.