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| Edited By: Pooja Sarkar |Source: DNA |Updated: Mar 17, 2018, 04:42 AM IST
Commercial real estate, which indicates the actual recovery in the realty sector, is poised to remain a tenant’s market than a seller’s one, this year too.
Abhishek Kiran Gupta, research director, Jones Lang La Salle Meghraj, said, “We are in the recovery stage. Last year 20 million square feet (msf) of leasing happened across the country and this year it would go up by 50% to 30 msf. It is better than the bottom levels, but we expect some fantastic expansion from 2012 unless we are hit by Europe and China.”
Approximately 60 msf of leasing space is lying vacant and it will take another 6 quarters to absorb this ready supply, an analyst with a domestic brokerage said.
“Even Ishaan Real Estate Plc in its conference call acknowledged that they are leasing at 20-30% lower rates than earlier. It’s a long way to recovery.”
Very little supply is expected this year and leasing may start happening by the end of this year, Param Desai, research analyst with Angel Broking, said.
“About 50% of the supply that is readily available from last year needs to be absorbed first and add to it the fresh supply before we talk of new launches. None of the developers are launching commercial now, everyone is busy completing them and selling it outright,” he said. A few micro markets will perform better than traditional markets for office leasing such as Bandra Kurla Complex in Mumbai, central business district of Pune and some areas in Gurgaon, Gupta of Jones Lang La Salle Meghraj said. In Mumbai, Nariman Point has a vacancy level of 11% at present.
Though enquiries are happening and leasing may start by the year-end, recovery in prices seems to be a distant dream for developers.
Gupta said, “I have serious doubts that 12 new projects have been launched this year. Right now the clear focus is on completing projects.”
A recent report by CB Richard Ellis for second quarter 2010 notes that Bangalore has seen a few big-ticket deals ranging from 50,000 sq ft to 1.2 lakh sq ft. This has been the only region where rentals have appreciated nearly 3% and capital values 6%.
