Commercial Price Corrections for lands revives Mumbai CRE market

By Pallavii Pitale

Due to the significant correction of commercial prices over the last year, many positive commercial transactions have taken place in the Mumbai Metropolitan Region.

The trend has changed from leasing to buying for companies occupying large spaces in CBDs, Extended CBDs and PBDs. These large scale commercial transactions of areas like ( 400,000 / 500,000 sq.ft.) are an indication of the revival of Commercial real estate market in and around Mumbai and would surely propel other large space occupiers for such deals in Mumbai Commercial Real Estate market.

Bandra Kurla Complex is the most favourite destination for premium occupiers. Many Multinationals and large Indian companies especially in banking and financial sector are planning to buy space in this area which resulted in healthy growth of the property rates in this area over the last quarter. Airoli is another area which has witnessed an increase in rate and generated interest especially in the SEZ space from various Export Houses and IT companies.

Both these locations have strong backing of State Government in terms of implementation of various urban planning projects and have relatively better urban services and utilities.

Most of the other areas are with more or less stable rate structure. Due to this situation, more and more developers and land owners have started showing interest for development of new lands. Agencies like Railway land authority, National Textile corporation and MMRDA are looking forward to release more land for development in the city which could be a good news for the buyers, provided the pricing structure is flexible and buyer friendly.

The trend of renting a property has not yet changed for the small and medium investors. No changes in the rental structure has increased the capital values in certain areas. Also increase in the property tax computation and introduction of service tax on commercial rents, has resulted in lesser yields for Commercial Real Estates in Mumbai .

However, large private equity players and other real estate funds for commercial properties have started showing a lot of interest into Mumbai CRE as they are anticipating speedy implementation of upcoming huge infrastructural projects in Mumbai.