At 3%, Office Rental Growth Slowest In 2008

PRLog (Press Release) - Mar. 6, 2009 - That the country's real estate sector is facing an unprecedented crisis can be gauged from the fact that the rentals for office space recorded a muted average growth of 3 per cent in 2008, against 36 per cent in 2007.There were wide variations in performance as central business districts in (CBDs) in Bangalore (18 per cent) and Kolkata (17 per cent) recorded double-digitgrowth while NCR, Chennai and Mumbai slipped into the negative zone, according to realty consultant Cushman & Wakefield. Pune recorded an average 12 per cent increase in rentals while Hyderabad clocked 6 to 7 per cent growth."Over-supply was the bane for office space last year," said Anil Kamath, an independent real estate consultant. "Rentals dipped drastically because of the simple reason that there was too much space for too great a price".

Till December 2008, Bangalore recorded an 18 per cent rise in rental. Kolkata, Pune and Hyderabad feature among the top ten performing office locations.The highest rental growth was witnessed in Bangalore with the CBD region recording 18 per cent appreciation over the past year owing to limited supply coupled with relatively low vacancy. Select locations in Hyderabad such as CBD and Prime Suburban witnessed 6-7 per cent growth while the CBD in Kolkata witnessed a 17 per cent rental growth. Central and suburban location in Mumbai as well as central and peripheral locations of NCR witnessed significant annual correction due to the weakening business sentiment and unrealistically high rates.

The increased vacancy and subdued demand across most micro markets made it difficult for landlords to maintain the historic high rentals. "Ghost spaces" or vacant office areas in commercial complexes dotted the landscape throughout the country. "The relatively new markets of Bangalore, Kolkata, Pune and Hyderabad were not as inflated as the more mature ones of Mumbai and Delhi, where price points defied the low operational cost advantage that developing economies.....http://www.maaproperties.com/Pages/ModuleContent.aspx?Mod...

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