Slowdown-hit office segment now clearly seems to have found its feet and confidence again. The demand levels in the second quarter have improved across most major cities resulting in improved transaction in the commercial real estate segment, notes a report by CB Richard Ellis, an international real estate consultancy firm. Cushman & Wakefield research estimates approximately 46-50 million sq ft of commercial space supply to come up across the major cities in 2010.
Most micro markets seem to have adequate to over supply and rentals are expected to remain stable or marginally under pressure in the short to medium term. A report by Jones Lang Lasalle Meghraj (JLLM) pointed out that the freefall in rental values has stopped or slowed significantly in all Indian metros with the exception of NCR-Delhi and Mumbai, because of their excess stock. ??While these two cities are currently feeling the affects of a large supply pipeline in the short term, they are also expected to lead the rebound in the property cycle, followed by Bangalore, Chennai, Pune, Hyderabad and Kolkata,?? said the JLLM report.
CBRE observed that the vacancy levels in the National Capital Region (NCR) dipped to 3%-4%, compared to 13%-14% in Q1 2010, for premium office projects. This absorption was primarily driven by firms in the banking, financial services and insurance (BFSI) segment, PSUs and organisations having extensive interactions with government agencies.
For Mumbai, the second quarter brought increased market activity in the extended and alternate business districts like Lower Parel, BKC and Kalina. ??With more than 3 million sq ft of future supply expected in the next few months and a diverse mix of occupiers, Secondary Business District has recorded one of the best absorption rates in Mumbai over the past two years,?? JLLM report said.