Office space occupancy plunges 60%; still better than China, Europe

Written by Mona Mehta | Mumbai | Updated: Aug 8 2009, 04:28am hrs
With office rental business continue to plunge globally during Q2 of the current fiscal, the occupancy for commercial office space by corporates and private equity players has dipped by 72% in China, 75% in Japan, 77% in Europe and 82% in Australia. It is higher as compared to 60% dip in India, according to Traine Moufarrige, executive director of Australia-based Servcorp Worldwide with whom K Raheja Corp has an exclusive arrangement for offering its serviced offices in India. This is despite the fact that there has been a 100% dip in commercial rentals in major metros in the country.

According to Moufarrige, We are in the process of scouting world-class commercial buildings in prime location in Gurgaon, Pune, Delhi, Chennai, Kolkata to set up Servcorp offices. This is because we are witnessing 82% occupancy in India for serviced offices mainly due to value added services that we offer to customers. For the purpose, Moufarrige, who is on a short trip to India, also added that he will visit various upcoming commercial projects by the Raheja Builders, hold talks with Gurgaon-based developers such as DLF, Unitech, among others.

Amidst the scenario, top builders in the country are in the process of completing their under-construction commercial projects and keep them ready for possession by the end of third quarter of the financial year 2009-10. Jones Lang LaSalle Meghraj (JLLM) managing director Pawan Swamy said, Due to economic slowdown, few big corporates, for instance, in South Mumbai may be shifting to occupy office spaces in areas such as suburban Mumbai which can offer bigger spaces at less prices. However, expanding full-fledged office spaces is not happening in India.

247 Park, a 1.8 million sq ft integrated workspace by HCC Real Estate Ltd (HREL), a 100% subsidiary of Hindustan Construction Company (HCC) is now ready for occupation with only 45% area leased.

Raheja Builders managing director Navin Raheja told FE, Raheja Builders upcoming commercial projects such as Raheja Innovation Mall, Raheja Business Floors, Raheja Constellation Mall and Raheja Corporate Floors in Gurgaon apart from Raheja Highway Arcade in Dharuhera will be ready for possession in the next three months.

Godrej Properties managing director Milind Korde told FE, Godrej Properties is soon planning to launch its two commercial properties, called Godrej Genesis in Kolkata and Godrej Eternia in Chandigarh which will be ready for possession in the next three to four months. We feel that commercial real estate sector could see revival in terms of enquiries turning into sales in the next two quarters as compared to 25% dip in demand in Q2 of 2009-10 which commercial office space is witnessing.

Akruti City Ltd is planning to provide its Akruti Gold commercial project ready for possession by October-end 2009, according to Akruti City chairman Hemant Shah. He said, We feel that by this Diwali, demand for commercial real estate would pick up. However, international property consultants strongly believe that currently, the demand for expansion of commercial space is still a distant dream.

Meanwhile, DLF Ltd, which was earlier planning to develop retail properties at Lower Parel in Mumbai, has recently changed their plans and now planning to develop commercial projects too along with retail properties which can be termed as mixed-used development, as confirmed by DLF spokesperson.