Rising Commercial Rents in Mumbai

Mumbai’s commercial real estate prices have appreciated considerably over the last two years but a new report has is that it has emerged as the fourth most expensive office location in the world, succeeding over Paris, Moscow and New York by quoting a rental of Rs.440/- per square foot.

Among the top 10 most expensive office locations in the Asia Pacific region, are Nariman Point and Central Mumbai or the Worli area, in Mumbai.

The biggest factor contributing to this upsurge of prices is the age old demand and supply mismatch. The multitude influx of multinational corporations, foreign investment banks and institutional fund houses, into the Indian market, lured by its economic expansion, excellent performance of the financial markets, and the surge in IT and BPO industries, with a archetypal inclination of headquartering in Mumbai, have overblown the demand for office space. All this is happening in a market where the availability of vacant stock and new supply is low.

Due to non availability of large spaces in the coveted Bandra, Kurla and Nariman Point,companies which are looking for 25,000 to 50,000 sq foot floor plates are now embarking on markets of Lower Parel and Prabhadevi where refurbished mill land is available at Rs.220- 250 per square foot. As an outcome of recent developments, some fresh supply of space is expected in the area but such is the demand that MNC’s have started pre-leasing. Thereby high rents are here to stay.

According to the consultants, this trend of increasing rentals will continue till the anticipated demand of 3.5 million square feet of office space is met with.