MUMBAI: After a spate of demand for office space in early October, office rentals were subdued throughout the third quarter of the year across Mumbai. However, Andheri saw a marginal increase of about 3.3 percent in office rentals over previous quarter.
According to a report by real estate consultancy Cushman and Wakefield, only Andheri and Vashi saw a rise in rentals. The report cited lack of real estate activity and limited churn (any addition to residential units) as the reasons for low-keyed rentals.
LOW-KEY MUMBAI
As per the report, in the third quarter of 2012, the malls and micro markets across high streets in Mumbai were unchanged. No commercial activity took place leading to a comparatively quiet scene. The report explains that main streets remain on the top of the retailer’s preference, clearly visible from the number of enquiries that have remained steady. However, due to the lack of available quality main street space these enquiries have not been converted to actual leases.
Arjun Thakkar, a real estate consultant based out of Andheri East said, “Andheri overall is a commercial space. Andheri East is more so because of various reasons like the industries located there, Seepz, the commercial spaces like Hubtown, big hotels, various shops, television companies etc. Due to these reasons, Andheri East definitely contributes to the rise in commercial activity, though it is difficult to put it in a figure.”
Ramesh Nair, managing director for West India of real estate consultancy Jones Lang LaSalle says, “Rental trends for retail ground floor space are Rs 150 to Rs 230 per sft per month, which depends on the location and quality of the product, while the office rentals are in the range of Rs 80 to Rs 120 per sq ft per month.” According to data available on realty site Magicbricks.com, retail rents in Andheri East is Rs 102-113 per sq-ft, with average price of Rs 107 per sq-ft.
DEMAND AND SUPPLY GAP
Jogeshwari-based real estate consultant and advisor Bishan Aman Singh says, “During early October, there were reports that 8 cities will see a demand of 180 million square feet of office space, which was topped by Mumbai. In next five years, Mumbai is to see the highest demand and supply, with 44 million square feet. However, due to various changes in the economy, enough commercial activity has not taken place. Hence retail rentals have been subdued. If you ask me, in Andheri East on an average there may have been about 10-15 percent commercial activity in retail. It may have contributed to the rise specifically in this area.” He adds that micro market is Andheri East is quite bustling and it is bound to affect the retail rentals.
AS PER the report, the rentals remained stable, even though vacancy remained at approximately 15 percent, which has remained constant over the last quarter. Singh asserts that Mumbai has always had a demand for quality retail space from both national and international brands. “But most times this demand is not met satisfactorily due to lack of quality space. This year, there have been no new malls. So they have only the existing vacant space. However, these malls are either not performing well or are located in areas that do not contribute well in sales. This has led to the vacancy remaining unchanged despite increased demand and no new supply.”
LOOKING AHEAD
The C&W report stated that prime main street locations and quality mall developments will continue to receive enquiries by retailers looking to expand operations into the city as they believe that the market has space for them. Rental values are expected to remain stable in mall developments and increase marginally in main streets due to preference by both domestic and international brands that are expected to enter the Indian Market in the coming months.’
Confirming this, Singh says, “Big premium brands, with enough cash backing, want space that is easily visible as well as convenient. They prefer main streets for this. It is going to increase the rental values in future.”
The report further confirms that property rental values are expected to remain stable in mall developments while a marginal increase in main streets due to preference by both domestic and international brands that are expected. An expected supply of 700,000 sq-ft is expected to become operational by the end of the year, the report stated.
Source: economictimes.indiatimes.com
