Real estate developers have witnessed a bad phase in the commercial real estate space since 2008. While the residential real estate saw a rise in demand between 2008 and 2010 followed by a price rise, commercial real estate continued to witness pressure on rents. As a result many developers have converted their commercial real estate projects to residential ones especially in Tier I cities.
While the demand remained slow for the office space, the supply has reduced only marginally, creating further pressure on rental yields. "The total office space supply that entered the market in 2012 was about 31 million sq ft, compared to about 30 million sq ft in 2011," the report said.
The seven cities surveyed were National Capital Region, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata.