Office realty gets down to earth

Rental and sale rates for office spaces continue to fall over six months, finally hitting more realistic levels

Rental and sale rates for office spaces continue to fall over six months, finally hitting more realistic levels

While the residential segment of the city's real estate market has witnessed an upswing in the last six months, the market for commercial properties continues to suffer, thanks to an excess of supply over demand.

Pankaj Kapoor, MD, Liases Foras, a real estate consultancy firm, said an additional 41 million sq ft commercial space will be generated in Mumbai by 2011.

"The demand is miniscule compared to supply because companies continue to sack employees.

Hardly anyone is hiring, so buying or renting extra office space is not on the cards at the moment. I expect the slump in commercial properties to continue for the next two to three years," added Kapoor.

NO TAKERS: Commercial rentals in Bandra-Kurla Complex, which stood at Rs 500 per sq ft in 2007, have apparently fallen to Rs 200 to Rs 300 per sq ft.

Royal Palms' recent ads foru00a0 office space in Goregaon said it is available for Rs 2,999 per sq ft, when declared rates for the properties in the area are said to be Rs 5,000 per sq ft.

Commercial rentals in Bandra-Kurla Complex (BKC), which stood at Rs 500 per sq ft in 2007, are said to have fallen to Rs 200-Rs 300 per sq ft.
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In fact, a financial major recently inked a rental deal for 45,000 sq ft of space in BKC at Rs 175 per sq ft.
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Commercial rentals in Nariman Point have slumped from Rs 400 per sq ft to Rs 200-300 per sq ft.

Deepak Peswani, a real estate consultant, said, "The rates in BKC came down because they were unreasonable earlier, and have now inched closer to realistic levels."

Rs 500
Per square feet rental for commercial properties in Bandra-Kurla Complex in 2007

Rs 300
Per square feet rental for commercial properties in Bandra-Kurla Complex now