Written by: Express News Service
3 min readApr 3, 2012 02:25 AM IST
First published on: Apr 3, 2012 at 02:25 AM IST
With bearish sentiment affecting corporate expansion plans in the country’s financial capital,there has been a steep decline in the commercial real estate taken up by Indian companies. In contrast,multinational companies (MNCs) have picked up considerable office space here.
The latest report by property advisor DTZ comparing the trends in the first quarter of 2012 to the same period last year shows a noticeable change in the profile of the commercial real estate occupier in Mumbai. Between January and March 2012,Indian corporate firms account for 29 per cent of occupiers of new commercial realty space in the city. This is a sharp fall from the 71 per cent market share of new space that these corporates picked up in the corresponding period in 2011.
In comparison,US- and Europe-based corporates were responsible for taking up 5 and 18 per cent of the space in the first quarter of 2011 respectively. In the same period this year,their market share has gone up by 32 and 23 per cent respectively.
According to Rohit Kumar,DTZ research head,an analysis of quarter-on-quarter and year-on-year office space take-up highlights the fact that relative market share of MNCs based out of USA and Europe has increased significantly while that of their Indian counterparts has dropped. “Be it IT,ITES or Banking,Financial Services and Insurance (BSFI),the MNCs find India relatively cheaper in terms of labour and real estate. On the other hand,despite the positive growth signals from the US and Europe,Indian corporates are more conservative,fearing the return of recession,” said Kumar.
He added that a recent survey of Indian corporates by DTZ showed that most have put their expansion plans on hold and are wary about investing in office space at this juncture. He added that the scene is expected to change around the third quarter of 2012,when the demand for office space from Indian corporates will see an increase.
Kumar,however,said as compared to a deep-in-recession 2008-09,there has been a flurry of activity in the commercial market in the last quarter. Some of the important transactions include BMS taking up 50,000 sq ft of space in Indiabulls Finance Centre,Otis leasing 42,000 sq ft in Mindspace (Malad),Writer Corporation taking up 35,000 sq ft in Kurla’s Kohinoor Business Park and in Andheri,Willis renting out 37,000 sq ft in L & T Business Park and ANZ taking up 40,000 sq ft office space in Boomerang.
Overall,however,the demand for new office space fell from 1.26 million sq ft in the first three months of 2011 to 1.18 million sq ft in the first quarter of this year. A key demand driver,the IT/ITES sector,which accounted for 45 per cent of the total take-up in 2010,has now been reduced to only 10 per cent.
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