Mumbai racing ahead in real estate boom

While the prices of commercial real estate in cities such as Delhi, Bangalore and Chennai are expected to stagnate over the next 12 months, prices in Mumbai will remain buoyant, said a report released by property consultants Cushman and Wakefield.

In the last quarter, rents in prime south Mumbai localities have grown by Rs five per sq ft and are expected to rise further by another Rs four. In central Mumbai prices are expected to rise by Rs five over the next year.

At the higher end of the market, the rise is higher with rentals expected to fetch Rs seven more per sq ft. In Bandra-Kurla Complex, a primary preference for corporates coming into the city, prices are expected to rise by Rs 10 per sq ft over July prices.

One of the reasons for the rising Mumbai prices is "the revived demand for office spaces from corporates, which is major segment of the overall demand besides the IT and ITES industry".

The report added that locations such as central Mumbai and Bandra-Kurla Complex were preferred by most of these corporates and this had contributed to the increase in prices in these areas.

This is in sharp contrast to other cities like Delhi, Bangalore and Chennai where the outlook is stagnant. In Delhi, rental values have witnessed a slow growth of 1-2 per cent in the central business districts while they have dropped as much 50 per cent from the peak values seen in 1996.

One reason for the down trend in prices in the city, the report said, were the tax breaks being offered by nearby states like Himachal Pradesh and Uttaranchal, which in turn managed to attract major corporate players - HLL, Dabur Colgate-Palmolive, Johnson and Johnson and Cipla.

In Bangalore, the prices are expected to rise only along MG Road and some peripheral areas in the next one year. In all other city areas the outlook is stagnant with no significant movement in prices. The report points out that in the medium term the city's infrastructure would need drastic improvement, in order to sustain the current demand levels from IT and ITES industry.

In Chennai, too capital values are expected to remain stagnant as no new supply will come into the market till the middle of next year.

In Mumbai, on the other hand, the sentiment continues to be positive with the sale of the mill lands as well as other industrial plots to developers, increased investment from financial institutions and developers from other cities wanting a piece of the Mumbai pie.

Towering high

In the last quarter, rents in prime south Mumbai localities have grown by Rs five per sq ft

In central Mumbai prices are expected to rise by Rs five over the next year. At the higher end of the market, the rise is higher with rentals expected to fetch Rs seven more per sq ft

In Bandra-Kurla Complex, a primary preference for corporates coming into the city, prices are expected to rise by Rs 10 per sq ft over July prices

The sentiment continues to be positive with the sale of the mill lands as well as other industrial plots to developers, increased investment from financial institutions