The commercial real estate sector that was seeing stagnancy, as demand was constant with no new supply, continued to see pressure as rents more or less remained the same.
Industry experts say that many real estate developers have been slashing prices by around 15% in Mumbai and National Capital Region to attract buyers. However, in some parts of Mumbai there was 0.8% increase in rents, indicating some demand, according to a Jones Lang LaSalle report.
Due to lack of demand many realtors have been postponing commercial realty projects and some are converting them to residential. “Many new projects that were launched in the first half of the year were launched at lower prices than some of the existing stock in the area. This is being done by developers who are in dire need of cash flows,” said a senior official with a realty consultancy.
In New Delhi the commercial properties continue to be under stress despite the fact that no projects were launched there.
“Delhi’s commercial property remains at status quo for now, but we are seeing increasing action in Mumbai and Bangalore. In Mumbai, the accent is on now on cost control, consolidation and relocation as city-based corporate rethink their options in the prevailing economic scenario,” said Anuj Puri, country head, Jones Lang LaSalle India. While capital value of some real commercial properties may have increased, banks stay reluctant to lend. Even private equity players who have been buying in to residential real estate projects are treading with caution as far as commercial real estate is concerned, say analysts.