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.