Mumbai Becoming Costly For Corporate Entities
Even big corporate entities finding it increasingly difficult to afford space in Mumbai. Cheaper property price in Mumbai suburbs driving MNCs and other corporate groups to the suburbs.
The recent report by a real estate research firm shows that even big corporate entities are finding it increasingly difficult to rent or buy space in the financial capital. Property experts believe that lack of parking space and cheaper property rates are driving MNCs and other corporate groups to the suburbs.
According to Knight Frank, the sale and lease size in the last quarter of 2009-2010 was 2.81 million sq ft, which dropped to 0.88 million sq ft in the same quarter of 2010-11. And the worst thing, the report says, is that CBD Belapur and Nariman Point, the business hubs in the metropolitan, saw nearly no deals. Instead, western suburbs, especially the Andheri-Jogeshwari- Goregaon belt, fared better.
Of the total commercial deals in the last quarter, 63 per cent were struck in the western suburbs, whereas BKC saw a mere six per cent of the total share. The central Mumbai belt, mostly Lower Parel and surrounding areas, retained 22 per cent of the share.
Ravi Bhinder, director, Prime Commercial Property, agrees that deals are rarely getting sealed because of the rates. “Owners who are ready to bargain and slash the rates are able to strike a deal. But those unwilling to budge from their demand may be in for a long wait until they make their next sale,” he said.
There is also talk of corporates wanting to wait because of rumours regarding lowering of real estate rates in coming months, which is likely to bring in more stock. “Only those builders who reduce prices will survive. The reason why Andheri and the western suburban belt did well is because the owners did not hesitate to reduce the prices,” said Bhinder.
The average price at which commercial spaces are selling in the first quarter of this fiscal is Rs. 12,696 per sq ft. Last year, it was Rs. 14,002 per sq ft. Incidentally, of the total deals struck in the current quarter, 42 per cent are owed to the IT sector, 11 per cent to manufacturing, and 6 per cent to banks and financial institutions. Other sectors make up the rest of it.
Ajay Chaturvedi, a real estate expert, gives other reasons for a dip in the sale and leasing out of property. “The actual area and the area the seller charges for vary by a huge margin. Other than that, different taxes have been imposed on commercial property – there is VAT, and the property tax, which has been doubled. This has affected deals,” he said.
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