Business Daily from THE HINDU group of publications
Thursday, May 10, 2007
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Business Daily from THE HINDU group of publications Thursday, May 10, 2007 ePaper |
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Marketing
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Marketing Research Industry & Economy - Real Estate & Construction Office space rentals may remain constant in near future: Study Our Bureau
The cities that will witness the most oversupply are Pune and Chennai of around 200 per cent, according to the DTZ study.
New Delhi May 9 The rentals in metros for commercial property may remain constant in the near future, according to a recent study by global property advisers DTZ. "Our city-level demand-supply analysis, seen in conjunction with the macro-economic fundamentals, clearly indicates that office space rentals are likely to hit a plateau in the next six to 12 months. Barring a few exceptions (primarily the Commercial Business Districts), the oversupply situation will lead to a correction in office rental values," says the study, which pertains to property prices in Bangalore, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune. However, this observation is in contrast with another recent study conducted by commercial real estate services firm CB Richard Ellis (CBRE). The CBRE report, pertaining to the same cities, mentions, "demand for office space is expected to remain strong in the short to medium term, especially in the peripheral and suburban areas of Tier-I cities. "A negative fall-out of the buoyant demand and an adverse demand-supply equation has been the spiralling rental values across micro-markets in most of the cities". According to the DTZ study, the cities that will witness the most oversupply are Pune and Chennai of around 200 per cent. While Pune will see an estimated supply of 17.9 million sq ft of commercial space, it will have an estimated offtake of 5.8 million sq ft in 2007. Similarly, Chennai will have an estimated supply of 19.5 million sq ft but an estimated offtake of only 6.5 million sq ft in 2007. Kolkata will have the next highest demand-supply mismatch with 8.3 million sq ft of supply and an offtake of 5 million sq ft, a difference of 66 per cent. Bangalore will have a supply of 18.3 million sq ft and an offtake of 13.3 million sq ft, a difference of 38 per cent, according to the DTZ study. Hyderabad will have a supply of 6.1million sq ft and an offtake of 4.6 million sq ft, a difference of 33 per cent. Delhi NCR is the next with 15.9 million sq ft of supply and an offtake of 13.2 million sq ft, a difference of 20 per cent. Mumbai is the only city that will see a shortfall in demand for commercial space. It is expected to register an offtake of 7.5 million sq ft but a supply of 6.9 million sq ft in 2007, a difference of eight per cent. However, according to the study, "As demand continues at the current pace and fresh supply tapers off, it is expected that the oversupply position will reduce over the longer term."
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