Mumbai commercial real estate, especially in central locations, could see surge in rentals in next two-three years with rentals in peripheral areas remaining stagnant, according to study by real estate consultant Jones Lang LaSalle (JLL). Mumbai has been ranked third in the list of cities globally that will add the maximum supply of Grade-A office space through 2017. The listing has been topped by Shanghai, followed by Mexico City, Mumbai, Beijing, Singapore, Sao Paulo, Tokyo, Moscow, San Francisco and London in the top 10 in the first half of 2016, according to the study.
“The current office stock of the city stands at 106 million square feet and it will add 8% of this stock through 2016 or almost 8.5 mn sft. From 3Q 2016 through 4Q 2017, the financial capital of India will expand its Grade-A office footprint by around 15% or almost 16 mn sft,” Ashutosh Limaye, national director – research, JLL India said.
However, the study said that the figures have not taken into account construction delays, but the developers may stick to around 13 million sq ft, which is significant nonetheless. The study further added that peripheral areas could see growth of office areas as there could be a dearth of supply in good locations after 2019. What developers therefore need is to plan constructing new buildings to meet the future demand in the good locations.
“Much of this projected office supply consists of buildings launched many years ago and Mumbai has seen only a few launches in the last few years. While the peripheral areas will see an oversupply, the supply at right locations will be very less. The Grade-A supply to come up in 2018-19 in the city’s de-facto central business district (CBD) of core Bandra Kurla Complex (BKC) and SBD Central will be just 1.6 million sft in an ideal scenario, i.e. when delays do not occur in construction work, out of a total expected supply of 11 mn sft, ” Limaye added.
The survey further added markets from emerging economies dominate the top-10 list with Shanghai coming on top with 42 per cent of its current stock to be added in the next 18 months, followed by Mexico City at 22.5 per cent).
Beijing (at 14%), Sao Paulo (at 10%) and Moscow (at 7%) are three other cities from emerging economies among the top-10.
Singapore City will add 11 per cent, Tokyo will add 9 per cent, San Francisco will add 6 per cent and London will add 5 per cent of their current office stock among mature economies.