Mumbai commercial real estate see strong appreciation | INRnews
Mumbai, November 17, 2006 : Mumbai's commercial real estate market has appreciated considerably over the last one year. Rents in South Mumbai (CBD) for Prime and Grade A office space are up by 73% while capital values are up by 51% vs. 12 months ago. In the suburban Bandra Kurla complex, rentals are up by 132% and capital values are up by 115% over a year.
Mumbai's CBD - Nariman Point and the secondary business district at Bandra Kurla Complex (BKC), are beginning to be considered the most expensive commercial locations in India. It is interesting to note that corporate tenants are willing to pay a premium for good quality construction, convenience and connectivity.
Though both the locations are popular, prices in BKC are approximately 25% - 40% higher than the CBD on a carpet area basis despite it offering lower efficiency (approx. 65%) compared to the CBD (approx. 80% - 85%). This is possibly because BKC is centrally located, easily accessible and closer to employee residences, besides having easy access to the airports. The upcoming Bandra-Worli Sea Link (scheduled for completion in 2009) will further reduce travel time to South Mumbai.
The CBD offers no new developments while BKC has newer buildings with larger floor plates, ample reserved car parking spaces, modern amenities and better environment. Strict architectural standards set by MMRDA, have ensured that buildings in BKC are comparable to the best in the country.
BKC buildings have singular ownership compared to multistrata titles at the CBD, thus ensuring better maintenance standards.
Strong demand for international standard of construction in office space from corporate tenants and diamond merchants, has driven the values upwards.
The chart on the left shows current commercial real estate capital and rental values in Mumbai.
Cushman & Wakefield expect an increase in rent for prime properties in the short-term, and rates to stabilize in the medium to long term in micro-markets such as Andheri (E), Lower Parel, Malad (W) and Powai. Micro-markets such as BKC, Vakola and Kalina are expected to witness 10% - 15% appreciation over the next few quarters. The demand for good quality office stock in BKC and Vakola continues to remain strong while supply is limited.
Recent Leasing Transactions in Mumbai
- RNA Corporate Park, Bandra (E) – Reliance Energy leased approximately 22,500 sq.ft. built-up area.
- Kamala Mills, Lower Parel – Anand Rathi leased approximately 11,700 sq.ft. built-up area.
- Bahar Cinema, Andheri (E) – HSBC leased approximately 76,000 sq.ft.
- Solitare Bldg, No 10. Gr. Floor, Andheri (E) – Crisil leased 9,000 sq.ft. built-up area.
- Ruby Corporate Park, 1 Floor, Dadar – Max New York Life leased 4,650 sq.ft. built-up area.
Recent Investment/Sale Transactions in Mumbai
- Marathon Innova, Lower Parel – Dawnay Day purchased 50,000 sq.ft. within this building.
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About Cushman & Wakefield
Cushman & Wakefield is the world’s pre-eminent real estate services firm. Founded in 1917, the firm has 192 offices in 58 countries around the globe, and more than 11,000 talented professionals. The firm delivers integrated solutions by actively advising, implementing and managing on behalf of landlords, tenants, and investors through every stage of the real estate process. These solutions include helping clients to buy, sell, finance, lease, and manage assets. Cushman & Wakefield also provides valuation advice, strategic planning and research, portfolio analysis, and site selection and space location assistance, among many other advisory services.
By INRnews Correspondent
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