The economic meltdown and weak market sentiments brought about a steep decline in commercial real estate rentals, especially in the last quarter of 2008-09. But the situation seems to have improved gradually over the last few months, following positive consumer sentiments, low interest rates and the willingness to expand by leading corporate houses.
According to a study conducted by Jones Lang LaSalle, a global real estate consultancy firm, Mumbai, with an annual rent of around Rs 39,440 per square metre, continues to be the second costliest city in the Asia-Pacific region in terms of prime rental rates, despite a 40% drop in rentals from its peak values. Delhiwith an annual rent of around Rs 35,742 per square metre finished fourth, after Tokyo and Singapore.
“This improvement in rentals is surely a boost for the commercial property developers,” says Arjun Anand, Director of Ashoke Realtors, a mid-sized real estate firm in Mumbai.
 Improving performance
Commercial real estate rental rates are showing signs of recovery in cities such as Delhi, Mumbai, Bangalore and Pune, due to the following figures:
This brought about a significant improvement in commercial real estate rental rates across India in the first quarter of 2009-10, as against the last quarter of 2008-09. The average decline in commercial rental rates stood at 8.3% in April-June quarter of 2009-10, as against 19% decline in January-March quarter of 2008-09. “These figures are hard to ignore and is expected to improve over the foreseeable future when the absorption rate would overcome the supply,” opines S.F. Rizvi, MD of Canopy Dwellings Private Limited, a mid-sized real estate firm in Bengaluru.
Going forward, with prices stabilising, demand surpassing supply and the GDP growth rate likely to bounce back in 2010, commercial real estate rental rates in India will definitely bottom out.
Jeeta Bandopadhyay |
