Maharashtra Revamps Regulations for IT Parks
A Boost for Mumbai's Commercial Realty
Mumbai's commercial real estate segment is gearing up for a significant policy change. The Maharashtra government has taken a proactive step to facilitate the city's growth as an international financial hub by revising property utilization rules. Previously, IT parks and buildings dedicated to information technology (IT) could only dedicate 30% of their constructed area to financial services. This constraint has been relaxed, allowing up to 80% of space for the sector.
Government Notification Highlights
Last week, an official government notification brought this amendment into light, with the aim to enhance employment opportunities and attract investors in financial services. The move builds momentum for commercial space expansion in Mumbai, potentially tempering property rental rates and addressing the critical demand for space in the city. Current prices hover around $400 per sq ft, akin to global cities like London and New York.
Projects Affected
Over 100 IT-centric buildings in Mumbai and its suburbs, along with several proposed IT Special Economic Zones (SEZs), will undergo adjustments to their space allocation plans. This reconfiguration includes the entire spectrum of financial services, such as stock brokerage, investment management, and consultancy firms.
Impact on the Market
Property sector analysts from DTZ have projected that over 15 million sq ft of office space will debut in 2008. Experts like Pawan Swamy, MD (Markets) at Jones Lang Lasalle Meghraj, underscore the regulation change's potential. With the erstwhile constraints, interest in IT-specific buildings was dampened, mainly due to non-IT entities' ineligibility. Now, general enthusiasm for these projects is resurging, with multinational corporations set to take part as occupants.
State's IT Policy Review
Though the sector is optimistic about the benefits, uncertainties regarding the timing of this policy revamp remain. The official clarification states that a renewal of the IT policy, initially drafted in 2003, will be unveiled in January 2009. Pending enhancements include substantial tax benefits for the IT industry, while ensuring that the utilization of constructed space for financial services aligns with broader policy directions.