Commercial rentals stabilise

Commercial property rentals in the central business districts (CBD) of Mumbai, Gurgaon, Noida, Chennai, Bangalore and Pune have stabilised, as business optimism has pushed demand up.

Delhi was the only city which continued to experience rental contractions in the quarter, as existing office oversupply, coupled with availability of cheaper alternatives, saw potential customers shift to locations such as Gurgaon and Noida, according to a property study released by Colliers International.

In Mumbai, over 9 million sq ft of office space was available to let in the third quarter, and about 40% of it came from new supply in locations such as LBS Marg, Thane, Bandra-Kurla Complex and Lower Parel. Rentals remained stable in almost all the micro markets except Andheri East, which witnessed a marginal decline.

About 4 million sq ft of office space was available in Bangalore, about 60% of which was located in the Outer Ring Road (ORR), EPIP Zone and Whitefield areas. More than 70% of the available supply was contributed by IT/ ITES space.

Delhi saw only 1.5 million sq ft of available space, which is mostly concentrated in Jasola. No new supply was added in this quarter. Demand continued to remain sluggish, with rentals falling 7-12%. The fall in rentals was highest in the CBD as many tenants were looking to relocate to peripheral and suburban micro markets with lower rentals.

Rentals in the CBD were in the range of Rs 230-300 psf per month, while the rentals in secondary business district (SBD) were in the range of Rs 110-170 psf per month.

The loss in the commercial market in Delhi led to  stable demand in national capital region’s (NCR) in Gurgaon and Noida.