News & Views on Indian Real Estate

Thursday, August 14, 2008

Slow growth forces realtors to cut rentals by 10-15%

The commercial real estate market across major cities in India saw a slow performance in the second quarter of 2008. This has forced real estate developers to cut commercial rentals by around 10-15 per cent across India. Mumbai, the commercial capital, witnessed stagnant rental values, while Delhi saw a strong correction after the IT/ITeS industry, the largest consumers of commercial real estate, deferred their expansion plans on fears of a global meltdown.ET on June 17 had reported that commercial rentals across India have started to fall.Noida witnessed the highest vacancy rate of 15 per cent. The supply mismatch in the IT/SEZ segment was reflected through rentals which witnessed a correction in the quarter. The total supply for Mumbai in the second quarter was 4.09 million sq.ft with IT/ITeS specific supply estimated to be 40% of the total. The city recorded a demand of 1 million sq.ft largely driven by absorption with fresh pre-commitments taking a backseat resulting in an overall vacancy of 5 per cent in the quarter. Thus the developers had no option but to cut rentals.

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