Rentals in Metro

Rentals and capital value of office space witnessed a further drop during the January-March quarter in metros like Delhi, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata.

The financial and IT sectors, which have been hit hard by the slump, are postponing their capital expenses and giving up on excess space.

The adverse supply-demand crunch, high interest rates and low mismatch and non-availability of confidence in the economic outlook financing options, has impacted the realty sector hard in the form of substantial slowdown in construction in the last few months of 2008. Most new projects remain on paper. While not ruling out the scope of further correction in the coming quarters, the report said that the prospects of any sharp decline are unlikely. Transactions are expected to pick up in the major cities in the medium to long-term period.

With the IT sector facing a slump, the peripheral market of Gurgaon continues to be slow. This quarter witnessed an increase in the supply (around 0.25 million sq ft) of furnished space and availability of sub-lease options In Noida the current vacancy rate is around 25% to 30%.

Mumbai has also seen a southward trend in rentals across all micro markets. The central business district of Nariman Point has witnessed a significant correction in rentals over the last 6-9 months with additional secondary stock added to the micro market, taking the vacancy rate to around 15%.

Despite the general lack of demand, extended business district - Lower Parel and Worli has witnessed a revival of construction activity in many of the projects that were earlier stalled.

Pune, upcoming metro city

Recently metropolitan city in India are Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad. Recent Assocham Eco pulse (AEP) study suggests that Pune may be the added to the list.

The rising appeal of Pune is evident from its highest real estate prices and maximum population among the other upcoming cities. Pune is the best city offering optimistic business environment. The AEP analysed four tier II cities Ahmedabad, Pune, Lucknow and Chandigarh. The parameters necessary for a metro city are social infrastructure, infrastructure availability, real estate cost and availability, transportation facility, presence of quality educational institutes, employment opportunity, facility of financial services and business environment. Pune occupied the first position though it needs to improve on social infrastructure, transportation and financial services.

Pune with 26 malls and 25 category star hotels (both maximum among the four cities under survey) ranked it first in employment opportunity and business environment, infrastructure availability and real estate cost and availability and educational institutes. But it stood 3rd as far as social infrastructure, financial services and transportation were concerned.

In real estate prices and availability, Pune stood first, Chandigarh being the second, Ahmedabad third and Lucknow the last one. It is learnt that process for acquiring land in Lucknow is the most time consuming.

Pune lost out to Lucknow and Ahmedabad on account of transportation facility and connectivity.

Pune carved the maximum share of 32.74 per cent in the total jobs tracked by Assocham Placement Parameter for the period January-June 2008. The prominent sectors attracting large number of aspirants include IT, manufacturing, engineering and academics among others.

“There is a grave need for a seventh metro city in our country as most of the present six metro cities in India are facing pressure of rising migrant population, crumbling infrastructure facility and manpower crunch, along with exhausting office and residential space and rising rental cost” said the Assocham spokesperson.