There's both good and bad news for people looking for commercial space in Mumbai. Average office rental has fallen in the past six months, but it is still the sixth highest globally - reflecting an acute space shortage in India's financial capital.
According to international realty consultancy CB Richard Ellis, which tracks office occupancy costs in more than 170 cities across the world, commercial rentals continued to witness a correction globally between October 2008 and March 2009.
Rates in Mumbai too dropped in tandem, falling to the sixth slot in the consultancy's latest list of world's most expensive office markets, from the fourth most-costly rank it was accorded in the previous report.
The latest CB Richard Ellis report said average occupancy cost in Mumbai has slid to $131.04 per square feet annually in the six months ending March 31, from the $170.85 commanded in the previous six months.
Delhi was ranked 12th with an annual occupancy cost of $86.94 per square feet.
"This ranking highlights the decrease in rentals we have witnessed in the last six months due to a reduction in demand," said Anshuman Magazine, chairman and managing director of the consultancy's South Asia operations.
At the same time, Magazine said, "Mumbai continuing to be in the top 10 and Delhi at the 12th slot reflected the shortage of prime office space supply in India".
"To reduce office occupancy costs further and facilitate more supply of office space we need to urgently improve our infrastructure and amenities. This would bring our world rankings down further and make India more competitive," he said.
Tokyo's Inner Central District was ranked as the world's most expensive office market, with an annual occupancy cost of $183 per square feet followed by London's West End at $172, Moscow at $170 and Hong Kong at $150 per square feet.
According to the report, major global office markets in many cases have seen occupancy costs fall by 20 percent or more over the past 12 months.
Across the 170 cities that the consultancy tracks, office rentals fell 2.8 percent over the 12-month period ending March 31, 2009. Singapore had the largest year-over-year decrease in occupancy costs, registering a drop of 34 percent.
"The great global recession has clearly taken its toll on the world's office markets, particularly those with significant concentrations of financial industry employers," said Raymond Torto, global chief economist at CB Richard Ellis.
"The most expensive office markets, as measured in dollars, are considerably less expensive than a year ago and occupiers are now in a strong position to procure prime space at attractive costs," Torto said.
"For instance, a year ago, office space in London's West End was nearly $300 per square feet, while today that space goes for $172 per square feet."