Commercial real estate rental costs rising due to ongoing economic revival, say real estate consultants.
Linking Road at Bandra has recorded one of the highest annual gains in rental values across the globe, according to an annual survey by global real estate consultants Cushman and Wakefield.
The location saw a rise of 33%, with rentals touching Rs665 a sq ft per month in 2009-10, from Rs500 per month in the corresponding period in 2009. The hike notwithstanding, rental values at Linking road are still second to New Delhi’s tony Khan Market, which increased by 15.80% to touch Rs1,100 per month in 2009-2010, from Rs950 per month, after a dismal 2009 when the commercial real estate market had faced an unprecedented crisis.
According to the report, ‘Main Streets Across the World 2010’, Khan Market has also become the world’s 21st most expensive retail high street, moving up three notches since 2009. The survey also states that India has improved its position from 24 in 2009 on the back of a strong rental value movement this year.
While New York’s Fifth Avenue retains its position as the most expensive shopping destination in the world, Hong Kong’s Causeway, and Ginza in Tokyo are in the second and third places, ahead of London, Paris and Milan in the 2010 survey, the firm said in a release. The study was done among 269 shopping locations across 59 countries.
The hike in rental values at Linking Road, however, was not reflected in other high streets in Mumbai. Rentals at Colaba Causeway increased by a meagre 2.90%, from Rs350 to Rs360 per month, while Kemps Corner and Flora Fountain saw no change, with rentals stuck firmly at Rs380 and Rs330 per month, respectively.
Retail experts say the reasons could be poor infrastructure and lack of space, leading to high rentals. Cushman & Wakefield India’s executive director Kaustuv Roy sounded a note of caution, saying, “Landlords will be cautious about the rate at which rentals go northwards. Their lookout would be to keep prices at acceptable limits of growth.”