June 5, 2021 3:15:44 am
An Information Technology firm Tecblic Pvt Ltd will be shifting to a new office on upscale Sindhu Bhavan road in Ahmedabad later this month, paying 33 per cent lesser rental over what it currently pays. Faced with oversupply, vacancies in office space is now touching 50 per cent in some areas of the city, allowing firms like Tecblic to find cheaper options.
“We were paying Rs 45 per square feet for a 1,100 square feet office space in Bodakdev. The space that we have rented now costs us around Rs 30 per square feet. Though we are an IT firm, working from home is not an option for us, because of the kind of work we do,” said Shinoj Nair, co-founder of the city-based IT firm which has taken up a 2,000 square feet office space to accommodate a larger team. The firm has also got in to a four-year rental agreement with the owner, where the firm will be paying just five percent increase in rentals every year.
Firms like Tecblic has been able to find a good deal in the current real-estate in Gujarat where cities like Ahmedabad and Surat are facing an oversupply of office spaces, leading to vacancy levels that are as high as 50 per cent in newly constructed commercial buildings in these cities. A large number of businesses, opting to allow their employees to work-from-home or having rejigged their expansion plans, have contributed to the lack of traction in office space.
“The adverse effect of the pandemic is now getting reflected on commercial real estate, especially during the second wave. The big Indian and multinational companies which used to take up office space and were responsible for the traction in the commercial real estate space have temporarily shelved their plans and are no more buying or renting office space. Some of the firms have reduced the size of offices they were already occupying. This is resulted into a fall in rentals and rise in vacancies that are as high as 50 per cent,” said Praveen Bavadiya, president of Ahmedabad Realtor Association (ARA), a body of real-estate brokers.
The situation is similar from Ashram Road, CG Road, Drive-in Road, Corporate Road, Prahladnagar, SG Highway, Ambli-Bopal road and Sindhu Bhavan road which has a very high concentration of office and retail spaces.
“A company which had got into a nine-year agreement recently ended up vacating 33,000 square feet. Similarly, tours and travel firms have either closed down offices or have shrunk their operations as part of cost-cutting. However, this is a good time to rent and buy office spaces, as rentals have fallen by 20-22 per cent and there is a huge oversupply of office and retail spaces. The “To Let” board is a common sight,” Bavadiya added.
The trend among investors in real-estate sector is also fast changing. People who were looking to earn by parking money in the commercial real-estate spaces is now finding little appreciation for their investments. The sentiments for other commercial real-estate segments like shops and retail spaces are even worse in Gujarat.
Mayank Thakkar, a real-estate investor who rented out his commercial property in Ahmedabad to a restaurateur, is currently looking to dispose of his shop after the restaurant barely functioned during the last one year when severe Covid restrictions were imposed on the food and hospitality industry in Gujarat.
“In the last one year, there has been zero appreciation in the value of the property and now the restaurateur has sought a cut in rentals as he is unable to make ends meet during the last couple of months when his restaurant had to close down or function under restricted timings. So I am planning to sell this property. But I am in a fix as in the current market, I am unable to find buyers,” Thakkar told The Indian Express.
According to real estate experts, the tepid situation in the commercial real estate is expected to remain for a year. “Those in the real-estate sector do not know how business houses and corporates are going to reform and rejig their plans and what impact those plans will have on the office space market. So I believe, this situation will continue for some more time,” said Bavadiya.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines
- The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.