Office rental prices across the country’s leading business hubs—National Capital Region, Mumbai, and Bangalore—are unlikely to experience any significant declines, even as these commercial real estate markets are poised for a marked increase in supply, according to insights from a prominent real estate consultancy.
In particular, Bangalore is projected to see a further uptick in average office rental prices, while locations in Delhi and its adjacent areas, including Gurgaon and Noida, along with Mumbai, are anticipated to mostly hold steady in the short to medium term, as noted in CBRE's latest office market update for the Asia-Pacific region.
Only select smaller segments within the National Capital Region (NCR) and Bangalore could potentially see price corrections in the near future; however, a decrease in rental rates seems highly improbable in the Mumbai area, the report indicated.
CBRE remarked, "The National Capital Region including Gurgaon and Noida is set to experience a flattening trend in rental values over the short to medium-term.”
“Nonetheless, a few micro-markets, which are anticipating new supply, are likely to undergo a slight value correction within the next six months,” it added, highlighting the substantial new supply coming to marketplaces in Gurgaon, Noida, and Jasola in South Delhi.
The consultancy emphasized that extensive initiatives have been implemented to enhance infrastructure throughout the NCR in anticipation of the Commonwealth Games hosted in 2010.
Turning to Mumbai, the report stated that the area currently has over one million square feet of available corporate office space, with an additional nine million square feet expected to be made available in the coming two quarters, suggesting that rental values will likely remain unchanged.
Additionally, in an interesting financial maneuver, MPC Energy, a joint venture between Germany's MPC Capital and Switzerland's Synergy Asset Management, has invested Rs 1,300 Crore in equity purchases linked to special purpose vehicles initiated by Phoenix Mills, a reputable real estate developer. Of this investment, 70% is earmarked for fifteen ongoing projects, while the remaining 30% will be allocated towards six forthcoming projects.
The acquired equity stakes, ranging from 10% to 49%, will pertain to 21 different projects backed by Phoenix Mills alongside its subsidiaries, Entertainment World Developers and Big Apple. Each of these developments complies with foreign direct investment (FDI) regulations and operates as a separate corporate entity (SPV). Located in tier I and II cities like Mumbai, Chennai, Bengaluru, Jabalpur, Udaipur, Raipur, Chandigarh, Pune, and Indore, these projects are set to contribute meaningfully to the landscape of commercial real estate.