It would be hard to call Nariman Point as Mumbai’s central business district (CBD) any longer, given that most companies and banks have moved out to either mid-town Mumbai or the suburbs. There may be many firms still housed in offices overlooking the Arabian Sea — Reliance Industries, a host of private equity firms such as Blackstone and State Bank of India — but many, and almost all other banks, are now headquartered in the suburb of Bandra Kurla Complex.
Veteran stock market investor Rakesh Jhunjhunwala continues to work out of Nariman Point, and Radhakishan Damani’s purchase last month of 37,000 square feet space across five floors in Hoechst House for R134.25 crore came as a surprise. Damani paid over R36,000 per square feet for the property. And while Viral Desai, director (office transactions), Knight Frank India, believes the area continues to be a marquee business address and consequently many will want to have a signature office here, even he can’t deny that with most brokerages, banks and companies having relocated to other parts of the city, Nariman Point is no longer the central business district (CBD) of Mumbai.
Rohit Kumar, research head at DTZ India, too, believes that the area, although a CBD in most ways, is no longer attractive. “Newer buildings available in other locations with better safety standards, larger floor plates, modern façades, better connectivity with the suburbs and lower rentals and capital values have contributed in making Nariman Point less attractive in comparison,” Kumar says.
The rapid slide in global rankings since the global financial crisis tells the story better. In 2014, Nariman Point was ranked the 32nd most expensive office market in the world, commanding a rent of $79.55 per sq ft per annum, as per global property consultants CBRE. In 2012, it was ranked the 15th most expensive location by a Cushman and Wakefield, a slip of seven notches from 2011, when the location held the distinction of being the eighth most expensive office market in the world.
Office space in the suburbs to the north of the city, including Bandra Kurla Complex, Lower Parel, Andheri and Navi Mumbai, can be cheaper and the locations more convenient for employees, most of whom reside in the north of the city. The idea of larger offices appealed to many, as did the idea of being under one roof rather than spread out across buildings. “There is very little contiguous office space available in Nariman Point, so not many large lease or buyout deals happen in the location. Besides, no new supply is also coming in,” says Desai of Knight Frank.
But the place has not lost its charm. Santosh Vanjari, senior general manager, (office services) Colliers International, says given that most buildings in Nariman Point are old-styled constructions, the asset efficiency is much higher compared to modern IT/ITeS buildings. “If one leases out 1,000 sq ft area in Nariman Point, the carpet area would be at least 800-900 sq ft, but in the upcoming assets or projects under IT/ITeS it would be 600-700 sq ft. This plays a critical role in deriving the capital or licence fee values, and so having an asset in Nariman Point gives more value for money than an asset in buildings elsewhere in the city.”
Property consultants say Nariman Point will remain a niche office location and will continue to attract occupiers who have small businesses, heads of companies who reside in south Mumbai and those who do not have large office space requirements. The profile will be dominated by those whose work requires proximity to the BSE and RBI.
As of now, Nariman Point remains a recommendation by consultants for those whose work requires presence in south Mumbai and space requirement in the range of 10,000-15,000 sq ft.
However, Kumar of DTZ predicts a rise in demand for Nariman Point in the coming years. “Currently, the rentals in Nariman Point are lower than rents in places like Worli and Lower Parel. Non-CBD locations also have severe traffic congestion due to lack of road infrastructure, while infrastructure initiatives such as Eastern Freeway and Metro connecting Nariman Point to the suburbs will contribute in making Nariman Point an attractive location,” he says.