While demand for residential property in Mumbai continues to rise, there has been a steady decline in the demand for office space across the metropolis.
The reason being that supply of office space has outstripped the demand, and also companies are being very cautious about the price factor of lease rentals.
A quarterly report published by Cushman and Wakefield, a leading real estate consultancy firm, has found out that the total demand for office space in Mumbai stood at 15 lakh sq ft between July and September, which is 13.6% less as compared to the demand from April to June, when it was 17.35 lakh sq ft.
Arvind Nandan, executive director, occupier services, Cushman and Wakefield, said there are no chances of any increase in the rentals.
“There is surplus supply and prices may remain stable for a long time,” said Nandan. “Companies have come out of a difficult period and are now negotiating deals.”
The Bandra-Kurla Complex is all set to add to the office space supply and its effect would be felt in places like Lower Parel and the Thane-Belapur belt.
Rentals in Lower Parel had to be forcibly lowered, where a 1,000 sq ft office being rented at Rs. 1.85 lakh per month about three months back is now being leased at Rs. 1.76 lakh per month.
The situation could be gauged from the fact that many leading developers like Orbit, Ackruti and DLF all changed their plans and converted their commercial projects to residential ones.
However, developers are hopeful of the commercial realty market gradually recovering. “Inquiries have now started and demand is gradually building up,” said Babulal Verma, managing director, Omkar Realtors and Developers Private Limited, which is coming up with five commercial complexes at Worli, Kurla and Andheri.
Experts believe that the recovery has been very slow and there is a lot of bargaining that is taking place.
“I recently struck a deal, where we bargained the rent to Rs. 5 lakh per month from Rs. 6.5 lakh demanded by the landlord for a 5,000 sq ft property at Lower Parel,” said Prakkash Nichanii, CEO, anchor property consultants.