For the first time in six years,Mumbais Nariman Point has been dropped from the list of top 10 global commercial rentals. The commercial business district,which was the eighth most expensive office space in the world last year,has now slipped to 15th position.
According to a report by real estate consultants Cushman & Wakefield,Nariman Point saw rentals depreciating by 8 per cent over the last one year. In comparison,most other cities in the US,Europe and Asia-Pacific have seen their rentals rising with Hong Kong,London and Tokyo retaining their positions as the three most expensive commercial locations.
In fact,Indias premium commercial district,which once commanded unparalleled rentals,has witnessed prices falling to such an extent that they now equal rents in the alternate business district of Bandra-Kurla Complex (BKC). Despite the overall slowdown of commercial real estate in Mumbai,the swanky office buildings of BKC saw rentals going up from Rs 260 per sq ft per month in December 2010 to Rs 275 per sq ft in December 2011. On the other hand,rentals in Nariman Pointwhich soared during the peak period of 2007-08slumped from Rs 300 per sq ft to Rs 275 per sq ft over the last three months of 2011.
The report estimates that BKC is slated to see a further rise in rental values even as rentals in Nariman Point rationalise further. Ravi Ahuja,executive director,Cushman & Wakefield (India),said that at this rate,BKC will soon overtake Nariman Point rentals. Just this month,Deutsche Bank entered into a major lease transaction with Wadhwa Developers for renting a 1.2 lakh sq ft space in The Capital at BKC for a monthly rent of Rs 285 per sq ft.
There will always be takers for Nariman Point due to the quality of infrastructure in South Mumbai and sizable population in the area. However,the rentals will grow at a much lesser pace than before, said Ahuja adding that BKC is finally fulfilling its purpose of decongesting Nariman Point. He pointed out that locations such as BKC,Worli,Lower Parel and Andheri-Kurla Road offer larger floor plates and are not so far off from residential areas.
Several banks and financial institutions have in fact moved out of their offices in Nariman Point and consolidated their operations in larger offices further north. JP Morgan took up an entire building in Kalina for centralising their operations. Similarly Kotak Mahindra,which has a large presence in Nariman Point,will be moving to BKC where it will take up an entire building.