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Why Did The Real Estate Leasing Activity In Mumbai Decline!

In 2014, the commercial capital of India- Mumbai saw another year of moderate real estate leasing activity as the overall leasing activity dropped to its lowest in 5 years.

The commercial real estate leasing trend in Mumbai was in contrast with those in the rest of the country. Studies found that across India office space leasing witnessed a year on year rise of 11% at 35 million sq ft. Bengaluru dominated the leasing activity with a 39% of the overall market. It was followed by Delhi, the NCR (22%) and Pune (14%).

The improved economic sentiment in India has made companies to revise their office space requirement along with expansion plans. In 2015 more robust expansion plans are anticipated.

The main reason why the leasing of commercial spaces declined in the city is the limited adherence in the information technology space. IT firms are driving office space leasing in rest of the country, with large IT giants as well as start up ventures expanding their operations.

In the previous year, the rent commanded by commercial real estate in Mumbai also declined in the range of 4-8% year on year. The limited participation of cost conscious IT firms is the main reason for this decline. Many companies hold their investment decisions, and wait to see how the city’s economic scenario shapes up due to the new policies expected to be set by the new state government.

Some reports suggests that while leasing and sales activities are expected to improve in Mumbai in the next quarter, no major rise in prices is expected, particularly in the BKC market. A decline in prime rental values was witnessed in Mumbai due to lack of demand for micro-markets located in CBD- Central Business Districts.

It is forecasted that in 2015 the demand for office space would increase in Mumbai with a projected demand of 6.36 million sq ft. This is twice the actual absorption of office space last year. The rent is still expected to remain under pressure.

Courtesy :

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