RELATED ARTICLES |
“The reason other cities are yet to see upward movement is over-supply. In case of Mumbai and New Delhi, manufacturing and BFSI sectors are signing deals. In case of other cities, it is still being led by IT and ITeS sectors,” said Prakrut Mehta, national director - office and industrial agency, Knight Frank India, a property consultancy.
“Over the past quarter, the office real estate market has shown an uptrend in terms of level of enquiries, which has also resulted in enhanced deal velocity. While the IT/ ITeS sector has been slower to get back on the recovery path, corporate office space acquisition has been quite encouraging; FIs, FMCG and telecom sectors have all contributed to the same,” said a research report compiled by CB Richard Ellis (CBRE).
“It is still a situation of over-supply countrywide. More business will come if the economy keeps on rolling. Office space is purely dependent on how the country's businesses are doing. Electronics and financial sectors have started coming back to market,” said Rajeev Talwar, executive director of DLF, India's largest publicly traded real estate company.
For the commercial real estate to get buoyant all over the country, it would take another 10-12 months, opines Sunny Bijlani, director of Supreme Universal, a Mumbai-based mid-sized real estate company. “On the contrary, if the monsoons in 2010 turn out to be as bad as it was in 2009, we may have more trouble,” he warned. The reason for slower recovery in other parts of the country could also be attributed to slower global market recovery.
Crisil Research's recent study has an optimistic view on the Indian economy. "Though not insulated from the global crisis, India proved to be less vulnerable than many first anticipated. In contrast with advanced economies, its financial sector also stayed fairly healthy. This made the country's stimulus program more effective than elsewhere and accelerated its recovery," said DK Joshi, principal economist of the rating firm. "As a result, we expect India to regain and sustain its pre-crisis GDP growth rates of about 9 per cent starting in 2011, provided it hastens policy reforms in areas such as taxation, education, and foreign investment regulations."
Recession to a large extent has been responsible to the changed dynamics of commercial real estate sector. According to DTZ office space report, the market has moved from being a speculative one to fundamental one. “Markets will now tend to witness a convergence from speculative to a fundamental growth pattern, both from an occupier and developer’s point of view. Occupier expansion decisions are likely to be taken after much more intense scrutiny unlike before,” said the CBRE report.
“Awareness and value proposition of players will undergo a definite change from creating an aggregative to efficient supply of office space. Concerns regarding space efficiencies would increasingly become a factor when comparing products and prices by tenants. We expect occupiers to raise their acceptable level of building efficiency, quality and net cost of occupation, putting pressure on developers to respond through more efficient market products,” the report added.
Rezwan Razack, joint managing director of Prestige Group, a Bangalore-based commercial real estate development company, refuses to call the city’s commercial real estate market a slow one. “When do you call a market slow? When there is no activity. There are a lot of enquiries, there is no fear. It’s when you have fear you have a problem. Today, there are six large IT companies in the market making enquiries for office space,” he said, adding that in the recent past his company has signed lease agreements with Citrix, Panasonic, Japanese and German consulates. “Whatever we built in 2009, we have been able to rent out because pricing is realistic,” he said. The rentals are hovering around Rs 30-32 per sq ft in Whitefield, in the IT hub of Bangalore's suburbs and Rs 70-72 sq ft in the central business districts.
Tesco, IBM, Brady, Broadcom, Reliance Industries and Headstrong are some of the companies, which have recently signed large office spaces in Bangalore in the recent past. The commercial real estate of Hyderabad has also begun to see positive signs. “The IT corridor, which comprises areas such as Gachibowli, Madhapur and Nanakramguda, witnessed maximum activity as compared to the other micro markets. Approximately 0.65 million sq ft of fresh supply was introduced into the market in the fourth quarter of 2009,” said the CBRE report.
Of the 2.8 million sq ft of under-construction commercial spaces in Pune, around 80 per cent is still vacant, said Lalit Kumar Jain, chairman of Pune-based Kumar Builders. “Last quarter was good. We some leasing activity from BFSI and IT segment. Pricing is still 20-25 per cent lower. I think it will take another 12-18 months for the entire stock to get absorbed,” he said.
Some of the major leasing transactions were done by BNY Mellon in Cybercity, followed by Nalco and IBM in Hadapsar. “2010 is expected to augur well for the Pune office market, overall sentiment seems positive with an enhancement in the level of enquiries. Rental values are expected to remain stable over the short term,” added the CBRE report.
In case of Kolkata, “Prices are likely to stabilise from the present quarter onwards, said the DTZ report adding that “going forward, for over most of the next year, with a remote possibility of strengthening towards the last quarter of 2010. Salt Lake and Rajarhat are likely to account for over 80 per cent of the absorption activity, with Salt Lake continuing to remain more attractive at present price differentials”.
 Limited.JPG)
Post new comment