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BW Businessworld

In For A Boost: Mumbai Office Real Estate

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As per a Colliers International report, Mumbai's office real estate market is expected to witness a surge this year after years of falling annual absorption. The findings in the "India Office Trends To Watch For In 2015" report pointed that the next six months will see a boost in Mumbai's commercial demand from prospective tenants seeking quality office space. 
Nishit Agarwal, Associate Director, Office Services Mumbai says, "With a stable government and a strong mandate to stimulate economic growth, demand for real estate sector will pick up over the next 12 to 18 months. Real estate transaction volumes are beginning to see a gradual turnaround and we are already witnessing a trend of moderate to healthy leasing and sales activity. E Commerce companies, dot com companies, apart from conventional BPO and Software Development, along with the BFSI and Pharma sectors will likely to be the major occupiers in 2015."
The increasing demand coupled with lack of the new grde A supply is expected to benefit the landlords. While there will be an upward pressure on rentals for such properties, the overall rental values are expected to remain stable on account of the addition of 11 million sqft of new supply expected in the second half of 2015. This will negate the upward pressure on rentals, which are expected to remain stable. 
Going back to 2014, the total annual absorption of 3.12 million sqft was 44 per cent lower than that in 2013 which stood at 5.6 million sqft.  
There was also a decline in the average deal size. Over 60 per cent of the transacted deals were in the area range of 5,000 to 20,000 sqft. The BFSI segment was the main contributor to this demand, with a 39 per cent absorption share, followed by engineering (15 per cent) and IT/ITeS (8 per cent). Goregaon, Malad and Andheri East remained the most preferred locations among occupiers and had about a 32 per cent share of the total absorption, followed by Thane (19 per cent) and BKC (18 per cent).