India’s business capital, Mumbai, is witnessing a decline in demand for office and commercial space with dealings down by more than half since last year. Classy office space in the center of Mumbai, but it looks there are few buyers. According to a report, need for commercial real estate is lingering. Dealings of 0.88 million square feet were recorded in the fourth quarter i.e. January to March of Fiscal 11, against the 2.81 million square feet transacted in quarter 4th of Fiscal 10, that’s a 68 percent decrease in demand.
Though sale connections showed marginal progress from 13 to 23, the number of properties leased dropped from 54 to just 28 at the same time. A Consulting agency Cushman and Wakefield points to the high level of vacancy rate of 20 percent. Usually it is the BFSI and the IT and ITeS sectors that habitually drive demand in the commercial real estate space. Also since starting of this year the market has been polluted by several scams and that has unfavorably obstructed plans of several corporates.
Still, industry experts says in 2011 demand for commercial real estate across the country is expected to be around 42 million square feet. So, 2011 will be a pretty interesting year in terms of demand. The challenge on pricing will continue to stay. As the demand & supply disparity continues, most developers have so far desisted from hikking rental values. But still, market sentiment continues to be gentle with players expecting large developers to minimise prices further.