Mumbai to lead country's office supply market

According to a real estate market overview and outlook presented by CB Richard Ellis India, the country added approximately 55 million sq.ft. of office space in 2010 and is expected to add approximately 50 million in 2011-12. Additionally, real estate transactions which were on the rise in 2010, post the downturn in 2009, will continue to increase in 2011 as well.

According to Anshuman Magazine, Chairman and Managing Director, CB Richard Ellis South Asia Pvt. Ltd, “The overall real estate performance of the country has been on an upward trend with increasing transaction volumes. ”

In the coming year, prices will witness an upward trend in commercial and retail rentals in the CBD (Central Business Districts) and prime city districts. The suburbs, however, will witness marginal appreciation or stability in prices. 

In the retail segment the number of malls in India are expected to be over 200, while another 80-90 are lined up to get operational in the next two years. Retailers/tenants will continue to hold sway in certain oversupplied locations, pressing developers for revenue share and related incentives. Rents on the other hand have headed towards stability post 2009 and have witnessed an average depreciation of 30-40% from peak in second half of 2008 till mid-2010, across cities.

The Mumbai office market, which retained its position as the fourth most expensive office market in the world (as per the Bi-annual Global Office Rents report) in the last consecutive quarters of 2010, will continue to add additional supply, despite high vacancy rates. With approximately 47 million sq.ft. of stock, a substantial commercial supply of approximately 17-18 million sq.ft. is lined up till mid 2012 in Mumbai.  While the Central Business District (CBD) in Mumbai has witnessed a rental revival due to resurgent demand, the suburbs of the city continue to witness high vacancy pressures.

Mumbai will continue to lead the country in retail accumulation with NCR and Bangalore which together account for more than 70% of the supply.

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