``Grade A space is still scarce in Delhi, with no more than half a dozen Grade A buildings in Connaught Place. However, new Grade A space is being developed at a substantial rate in Gurgaon,'' says the report. In 1994, it says, rentals in Connaught Place reached Rs 225 per sq ft per month for Grade A space. Equivalent space can now be leased for Rs 150, it says. In locations like Nehru Place, which offer very poorly maintained office space, rentals are down to Rs 30 per sq ft and will go lower, the report predicts.The property market for office space in Delhi is also much lower when compared with other international cities.Chesterton Meghraj findings show that the demand from private sectors appears to be 1 to 1.5 million sq ft a year but should be able to grow to at least 4 to 5 million sq ft a year.The main problem in Delhi seems to be that the quality of buildings does not match the high rentals. Also the supermarket and the department store era is only tentatively emerging in Delhi. ``The highly managed, climate controlled shopping malls with strategically located `anchors' is yet to be seen.

Common parts of shopping centres tend to be very poorly maintained, with no central management,'' says the report. However, it says, that MNCs can find every conceivable luxury without too much difficulty in Delhi.

``What Delhi needs is one or two trophy buildings in Connaught Place to show that excellence begins at the centre. Also decently maintained Grade B space is lacking,'' the report adds.

At the top end of the market the scene is changing with developers beginning to offer international quality buildings for offices. TheChesterton Meghraj report says that leading developers like DLF and Great Eastern are now keeping some of the best buildings as medium and long investments. This may be beneficial for MNCs, who can now break out of the three-year lease clauses and have a more long-term relationship with the landlord.

Connaught Place, the central business district of Delhi, comes up for a lot of scrutiny in the report. The findings show that a lot of the household names in electronic goods and consumer goods have moved out of this area, leading to a loss of some of its commercial charisma. However, the rentals have still not fallen as much as they have in Mumbai (almost 50 per cent) and are only marginally lower, the report says.

The volume of vacated space in Connaught Place is over 120,000 sq ft and Connaught Place has incurred major opportunity costs during the last two to three years due to a lack of availability or high costs. The report projects that more losses are expected this year as many MNCs have moved out.``On the face of it, things look pretty bleak for Connaught Place,'' the report says. However, there is some tentative evidence that the trend for large operations moving out of Delhi is beginning to reverse with some big companies coming in from South Delhi, like Hughes Software moving to Videocon Tower, Jhandewalan, and Volvo to Kasturba Gandhi Marg,'' it adds.Connaught Place has to fight back for its place but the prevailing attitudes of the landlords will have to change, the report says. Gurgaon, on the other hand, has emerged as the clear winner in terms of building quality, speed and reliability of delivery and the provision of information to prospective customers.

For the office property market in Delhi to improve, the report concludes that, Delhi must recognise that commerce is every bit as important to its future as the business of government. At present, the city hasn't got its act together as an office market as complacency rules.

But will the Delhi Government and Delhi Development Authoritiesofficials sit up and listen?