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Office space is cheaper now

india Updated: Mar 03, 2009 00:51 IST
Gigil Varghese
Gigil Varghese
Hindustan Times
Highlight Story

Getting an office space in the country’s commercial capital will soon be a question of plenty and low rentals, thanks to the deepening global slowdown.

According to a report by global real estate consultancy firm JLL Meghraj on office space in the city, the vacancy level has gone up from 1.11 per cent at the end of 2007 to 4.78 per cent with the addition of 6.89 lakh sq ft in the last four months.

“The slowdown has lead to anxiety among the corporates who are re-engineering their operations to sustain themselves in a tough market condition by cutting costs like reducing head count, consolidating the number of branches or offices and moving out from high-cost locations to low-cost destinations,” said Abhishek Kiran Gupta, head of research at JLL Meghraj.

“All this is leading to a restrained demand for office space,” he added.

The prices have fallen by 5 to 15 per cent due to the current economic slowdown.

“The price correction has happened sooner that we expected and could fall further by another 15 to 25 per cent by the end of the year with the vacancy levels doubling,” Gupta added.

By the end of 2009, another 65 lakh sq ft will be added to Mumbai’s office space and the vacancy will double to almost 9 per cent, only worsening the situation for builders whose property will be up for grabs.

Developers with projects that are nearing completion or are ready for possession will be victims of the current dynamics.

Dipping demand and thick future supply pipeline of 65 lakh square ft by the end of this year, indicates that developers will have to correct their assets pricing if they want to attract occupiers, reads the report by JLL Meghraj.