With globalization of the Indian economy and a boom in its massive services sector, the commercial rental properties in India are enjoying unprecedented demand scenario.

As more and more investments flood the commercial segment of the real estate market in India, there have been huge demands for office and retail space in the country.

The hi-tech state-of-the-art office complexes and specialty malls are the new trendsetters in the commercial segment which are mostly in for rental or lease options by the developers. However, the area of commercial rental properties in India is still ruled by office space, showrooms, shops, call centers & BPOs.

Ongoing Trends

The real estate demand in major cities of India remained robust in the first quarter of FY08 with no signs of melt down. In fact, the trends are further likely to go strong as the demand is outstripping the supply in far great volumes.

Delhi: Major phase of boom in commercial property is noticed in Delhi. Although, about eight commercial projects are under construction in the Central Business District (CBD) and Secondary Business Districts (SBD) that will add some 1.2 million sq. ft of office space in the zone, no new capacities were added in the area in the quarter.

Moreover, six of the aforesaid projects are coming up in Jasola district. Thus, there will be an absolute shortage of quality commercial space in Delhi in the mid term.

Mumbai: The CBD of Mumbai at Nariman Point witnessed an increase in the absorption rates in the quarter over the previous year. One commercial building in Grade A office stock was added in the form of refurbished Thapar House, built in 1950s.

Besides, the major shopping mall project of Lake City Mall got completed in the period that added 4.15 lakh sq. ft of retail space in the area of Navi Mumbai.

On the flip side, a notion of jittery has been observed in the city over the enforcement of 12.36 per cent service tax on commercial property rentals.

Bangalore: The IT hub of India secures a balanced position in terms of demand and supply equation, this time. Strong pre-leasing activities were noticed with eight big projects coming to fruition in the CBD and SBD of the city, building about 2.34 million of high-quality office space in the city.

On Capital Prices

In line with the bullish trends, the capital prices in Delhi shot up by 18.80 per cent over the span of three months clearly indicating towards an uptrend.

Overall, the value of buying property in Delhi got hiked by 83.6 per cent in comparison of the previous year.

More importantly, the markets are analyzed as fundamentally strong vis-à-vis the movements of market forces. Speculative tendencies are restricted since the capital values are expected to automatically rise with scarce availability of space.

Businesses are expanding and corporates are hunting for more quality work space but then the availability is limited.

In Mumbai, a moderate average appreciation of 5.4 per cent is recorded in the capital prices at CBD and SBD, in the first quarter. Overall, an increase of 28.6 per cent is registered in the capital prices in the past 12 months.

The typical transaction size in Bangalore’s important commercial area Whitefield varied between 75,000 and 2,50,000 sq. ft, that shows demand for big size Grade A office space in the city.

Meanwhile, the CBD of Bangalore had an increase of 6.4 per cent in capital values, in the last quarter with yearly average shaping at 16.8 per cent.

Future Outlook

With Indian economy posting strong growth numbers, the business sentiments of the markets are expected to remain upbeat.

The real estate sector in Delhi in particular will cherish ahead with massive developmental projects progress in the wake of Commonwealth Games in 2010.

Buying property in Mumbai or Bangalore also makes sense for the investors with success of Indian services sector, especially IT and finance related.