Mumbai Commercial Real Estate : 2012 Forecast -
By Mr. Ramesh Nair
For those who thought 2011 was a discouraging year for Mumbai’s office space market, 2012 will not bring any obvious reasons for cheer.
Demand will be marginally lower than in 2011, with IT (Information Technology) and ITES (Information Technology Embeded Service) companies becoming even more cautious on account of the expected reduction in IT spend by US and European companies.
Economic Environment..!
The uncertain economic environment will continue, leading to reduced employment growth and therefore lower fresh commercial space absorption. Tighter lending standards for commercial construction will not help, either.
On the brighter side, these market conditions will continue to favor tenants in most of Mumbai’s micro-markets by ways of a larger bouquet of options, rational pricing and various concessions.
The market conditions are optimal for consolidation and relocation, and many Mumbai-based occupiers will avail of this option throughout 2012.
Office space rentals will show a further – though marginal – drop in the first half of the year as infusions of additional stock lead to higher vacancies. One direct result of this will be a sharp reduction in speculative commercial projects. The continued yield compression will cause a number of HNIs (High Net worth Individuals) will become active buyers of rent-producing and vacant office spaces in the city.
Demand for Smaller Offices
Also, demand for smaller offices in Grade A projects is expected to increase as more small and medium sized Indian corporates take advantage of the rationalized pricing and buy space in them.
About the author
Mr. Ramesh Nair is Managing Director( West) in Jones Lang Laslle India
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| Ramesh Nair , MD ( West) , Jones Lang Laslle India |
For those who thought 2011 was a discouraging year for Mumbai’s office space market, 2012 will not bring any obvious reasons for cheer.
Demand will be marginally lower than in 2011, with IT (Information Technology) and ITES (Information Technology Embeded Service) companies becoming even more cautious on account of the expected reduction in IT spend by US and European companies.
Economic Environment..!
The uncertain economic environment will continue, leading to reduced employment growth and therefore lower fresh commercial space absorption. Tighter lending standards for commercial construction will not help, either.
On the brighter side, these market conditions will continue to favor tenants in most of Mumbai’s micro-markets by ways of a larger bouquet of options, rational pricing and various concessions.
The market conditions are optimal for consolidation and relocation, and many Mumbai-based occupiers will avail of this option throughout 2012.
Office space rentals will show a further – though marginal – drop in the first half of the year as infusions of additional stock lead to higher vacancies. One direct result of this will be a sharp reduction in speculative commercial projects. The continued yield compression will cause a number of HNIs (High Net worth Individuals) will become active buyers of rent-producing and vacant office spaces in the city.
Demand for Smaller Offices
Also, demand for smaller offices in Grade A projects is expected to increase as more small and medium sized Indian corporates take advantage of the rationalized pricing and buy space in them.
About the author
Mr. Ramesh Nair is Managing Director( West) in Jones Lang Laslle India
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