India adds over 55 m sq ft of office space in 2010

  According to real estate market overview and outlook, 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 downturn in 2009, will continue to increase in 2011 as well.

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

In retail segment total number of malls in India are expected to be more than 200, while another 80-90 are lined up to get operational in the next 2 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 per cent  from peak in second half of 2008 till mid 2010, across cities.

On residential front, post demand dip in luxury in 2008, focus shifted towards mid segment product in 2009, amidst reduced capital values and mortgage rates, thereby generating substantial end user interest in the market. In 2010, speculative investments and developer expectations have increased, thereby pushing prices upwards by approximately 30-40 per cent. Many developers have shifted focus on premium/luxury segment in 2010, though it offers only limited demand. Capital values are on an upward trajectory in many prime locations, which might lead to slowdown in sales activity in a short to medium term, said the company.