Mumbai_Office_Market_Brief_Q1_09

Forenquiriesonthisreport,pleasecontact:PriyankarBhikshu,AssociateDirector-DelhiTel:[phone]E-mail:[e-mail]ervicesenquiries,pleasecontact:AnuragBhatnagar,AssociateDirector-CorporateServicesTel:[phone]E-mail:[e-mail]relieduponasabasisforenteringintotransactionswithoutseekingspecific,qualified,professionaladvice.Whilstfactshavebeenrigorouslychecked,DTZcantakenoresponsibilityforanydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport.Informationcontainedhereinshouldnot,inwholeorpart,bepublished,reproducedorreferredtowithoutpriorapproval.AnysuchreproductionshouldbecreditedtoDTZResearch.(c)DTZResearchmumbaiupdateofficemarketbriefQ12009GradeAofficemarketstatisticsNote:BaseRentsreflecttheaveragewarmshellrents.Occupancycostisrentplusalloutgoingswhereoutgoingsincludefixedmaintenancechargesapplicableasperlocalmarketnorms.1CBDincludesNarimanPointandCuffeParade2OffCBDincludesWorliandParel3SuburbanincludesAndheriKurlaroadandAndheri(W)4NewCBDmicromarketincludesBandraKurlaComplex,KalinaandSantacruz(East)5PBDmicromarketincludesGoregaon-Malad,LBSMarg,Powai,NaviMumbaiandThane.Exchangerate:US$1=INR51.18*ReflectoccupancycostchangescomparedtoQ408(notaccountingforexchangeratefluctuations)MarketshowingsignsofresilienceQ109sawtheadditionof3.3millionsqft(msft)ofnewsupplywhichwasareductionascomparedtothelastquarter.Mostofthisnewsupply(78%)wasinthePBDregion,takingthetotalstockofthePBDsubmarketstoalmost22msftwhichismorethanhalfoftheGrade-Acommercialstockinthecity.MinoradditionstothestockwereseenintheOffCBDandSuburbanmicro-markets.Thefallinrentalshasnotbeenveryprominentduringthisquarter(Q109),withnochangeintheCBDandPBDrentals.TheCBDrentalsseemtohavestabilizedfornow,whilethealreadylowPBDrentalsarenotofferingmuchscopeforfurthercorrection.ThemaximumcorrectionwasintheSuburbanmarketswhichsawafallof13%fromlastquarterduetoimmensesupplypressure.TheOffCBDandNewCBDhaveseenacorrectionofalmost8%each.Accordingtomarketparticipants,theNewCBDofBKCisnotexpectedtoseemuchcorrectionfromcurrentlevelsandpricesareexpectedtostabilizeatpresentlevels.0.61msftofabsorptionwasreportedduringQ109.Thefallfrom0.94msftrecordedinQ408canbeattributedlargelytothesingle0.25msfttransactionbyStandardCharteredbankduringthelastquarterwhichwasagainstmarketcurrents.GradeAofficerentals(2005-Q12009)SomeprominentbuildingscompletedinQ109were247Park(900,000sq.ft.)inKanjurMarg,VenturaITPark(500,000sq.ft.)inPowai,andRTechPark(400,000sq.ft.)inGoregaon.TheadditionofthisnewsupplyinthefaceoffallingabsorptionhascausedvacancylevelstorisefurtherandafourthofMumbai’scommercialstocknowliesvacant.TheBrihanmumbaiMunicipalCorporation(BMC)passedabilltocollecttaxesbasedonthecapitalvalueofproperties,thiswillbeachangefromtherateablevalue-basedcollectionofpropertytax,underwhichtaxisassessedontherentapropertycanearn.ThereformsareexpectedtofinallyrationalizepropertytaxcollectionsbetweenSouthMumbai(CBD),whererentsarefrozenbytheRentControlAct,andsuburbandistricts,wherepropertytaxwashigherthanthoseinSouthMumbai.IfapprovedbytheBMC,thenewrulewillcomeintoforcebyJuly‘09.AsperDTZ’slatestsurvey,‘DART-DemandAnalysisandRealestateTrends’onthestrategiesbeingadoptedbycorporaterealestateheadstocopewiththecurrenteconomicslowdown,companiesoccupyingspaceinMumbaifeelthatthiscitywouldbethefirsttobouncebackandrevivalisanticipatedoverthenext3-4quarters.Accordingtothem,thenext6-12monthperiodwouldofferthebesttimetotakeupadditionalspaceinthecity.Supplyandtakeup(Q12008–Q12009)Source:DTZResearchRecenttransactionsEtisalatleased100,000sqftatTechniplex,Goregaon(W)JPMorganleased100,000sqftatKRCTowers,KalinaFirstSourceleased50,000sqftatReliablePlaza,ThaneBelapurRoadTotalstock(sqm)Vacancy(%)Baserent(INR/sqft/mo)Occupancycost(US$/sqft/yr)%change(fromJan09)*6monthforecastCBD1163,5093.9425105.510.00–OffCBD2394,13820.1327568.00-7.94▼Suburban3747,60324.9712031.65-12.9▼NewCBD4479,84018.5627569.17-7.81–PBD52,033,19429.618021.100.00▼Overall3,818,28425.2314737.66-4.33▼India•Source:DTZResearchINRpersqftpm