Track2Realty Exclusive: West Zone Analysis–The cumulative take-up levels recorded between Q1-Q3 2012 in Mumbai and Pune were the lowest when measured up against transaction activity recorded during similar time frame since 2009. In Mumbai, the first three quarters of 2012 witnessed a total take-up of 2.4 million sq ft which was approximately 44% lower when compared to 2011. Similarly, transaction activity registered in Pune were in 2012 were down by 36% during the same time frame.
This restrained demand for office space is largely attributed to the overall financial uncertainty in global markets and economic slowdown witnessed in Indian markets. As a result, many corporates exercised caution and have adopted a “wait and watch” approach towards their expansion plans.
The occupier pattern in 2012 varied significantly between Mumbai and Pune. While IT/ITES continues to account for majority of office space demand in Pune, in Mumbai BFSI, consulting, healthcare and manufacturing sectors accounted to majority of office space take-up.
In order to reduce the growing gap between supply and demand, many developers were found going slow on under construction projects or launching new office space developments. As a result the year so far has seen a 35% drop in new supply in Mumbai when compared against 2011. Similarly, office space supply in Pune was reduced by 70% in first three quarters of 2012 when compared to 2011.
However, rental values have remained stabled across most micro markets in Mumbai and Pune. The ongoing enquiries coupled with anticipated improvement in take-up and slowdown in new supply has resulted in rental values largely remaining stable. Additionally, the recent wave of policy reforms, which have been much awaited, is expected to stimulate office space demand in next three to six months.
Best performing micro markets:
– Mumbai: Suburban and Off CBD locations continue to attract majority of office space demand. Additionally, New CBD location (Bandra Kurla Complex) continues to be the preferred destination of BFSI companies, which has resulted in low vacancy levels.
– Pune: Hnjewadi in peripheral market and Viman Nagar emerged as key markets in Pune.
Low performing markets:
– Continued migration to off CBD and Suburban location resulted in low demand for CBD markets. Additionally, slowdown in demand from IT sector has impacted the performance of peripheral markets.
Major Transactions:
| City | Tenant | Building | Micro Market | Location | Area (sq ft) |
| Mumbai | Tata Capital | Peninsula Business Park | Off CBD | Lower Parel | 60,000 |
| Mumbai | Marico | Grande Palladium | New CBD | CST Rd. | 60,000 |
| Mumbai | BMS | Indiabulls Finance Centre | Off CBD | Lower Parel | 50,000 |
| Pune | Citibank | EON | Suburban | Kharadi | 80,000 |
| Pune | Black & Veatch | Commerzone | Suburban | Yerwada | 55,000 |
Source: Market Intelligence, DTZ Research
Emerging Markets: Eastern Suburbs – Vikhroli, Chembur, Ghatkopar.
….to be continued
