The commercial realty market is showing signs of revival again after rentals plummeted 40% till the year ended March 2009. Fresh lease deeds are being signed again for office spaces, albeit at much lower rates than before.
According to a report by Colliers International, office rentals dropped 10-40% between Q1 of 2008 and Q1 2009 in Mumbai, Delhi and Noida, Chennai and Bangalore as demand shrunk.
Goutam Chakraborty, regional director-commercial lease, Colliers International, said, “The worst is over... demand has started reviving since April.” He expects the market to stabilise by the end of this fiscal.
Raj Menda, president of Confederation of Real Estate Developers Association of India (Karnataka), and managing director of RMZ Corp, said his company now has only 4% vacancy across properties. “The commercial realty market will grow 12% this year,” he said.
The present optimism aside, Q1 was a mixed bag for developers in metros.
Mumbai saw 20-35% decline in rentals in the first quarter of 2009 compared with the same period last year. The total inventory available in grade ‘A’ office segment is over 7.5 million sq ft, according to the Colliers report.
Delhi and Noida have an inventory of 4.5 million sq ft in grade ‘A’ multi-tenanted office space as rentals dropped by 20-40% in Q1. The Bangalore grade ‘A’ office market saw 30% drop in rentals and has an inventory of 4 million sq ft.
