Sunday, February 3, 2008

Pune commercial real estate witness an increase in vacancy rates - Cushman and Wakefield [FM8579-29]

High rentals and sub-prime properties:

As per findings by global real estate consultancy, Cushman and Wakefield (C&W):
"Pune also witnessed an increase in vacancy rates in the suburban areas of Nagar Road, Yerwada, Kalyani Nagar as well as peripheral regions of Kharadi, Phursunghi and Magarpatta owing to the high rentals and sub-prime properties prevalent in these markets."

Indian Commercial Real Estate Market:

Commercial rentals are witnessing a stabilization across cities over the past few months except for prime properties in NCR and Mumbai.

Why commercial rentals are witnessing a stabilization?

1. Significant supply that has entered the various micro-markets
2. The entry of new-age developers.
3. Corporate decisions on expansion in Indian market are becoming more studied. They are also more flexible in terms of moving to lower-cost locations now.
4. The oversupply of non-prime property has also led to this stabilization

In fact, the surplus space in parts of Noida and Chennai
is even leading to a downward pressure in rentals.

Healthy sign for the market!
Developers agree that the commercial market space is indeed seeing a stabilization and correction. And they feel that it is a healthy sign for the market.

Niranjan Hiranandani, MD, Hiranandani Developers:

“Rents in commercial space in some markets have stabilized but have not fallen which signals at a buoyant market. Though on an average the rents have stabilized, in Hyderabad, NCR and Pune there are some pockets and commercial projects for which the rentals are still on the rise.”

However, demand and corporate sentiments are still riding on a high note despite the fact that rentals are expected to remain stable in most of 2008

“The commercial lease market still looks good especially in tier-II and III cities such as Lucknow, Chandigarh, Amritsar and Jaipur. The mall arena remains strong,” says an Ansal API spokesperson.
-The Economic Times

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