May 10, 2009 10:08:30 pm
Lower Parel,one of the most sought-after office destinations until recently,is set to become the most severely hit casualty of the realty slowdown.
Real estate consultancy firm Knight Frank has predicted a 60% drop from peak level rentals at Lower Parel. In its recent report reviewing the office market for the first quarter of 2009,the firm states that the rentals in the area will see the sharpest decline and will bottom out at a rental of Rs 136 per sq ft a month. The report says that with the freeing of mill lands,areas like Lower Parel and Worli are witnessing ample construction activities. It adds that of the estimated 8.33 million sq ft of office space that will be available in the island city by 2011 end,85% would be in Lower Parel.
So far,office rentals in the area have declined by 47% from the peak levels. The additional supply expected by 2001 include three buildings at One IndiaBulls centre in Jupiter mills,two buildings at Elphinstone mills,Ashok Piramal groups project at Dawn Mills and Hafeez Contractor House along with a few smaller projects. The much delayed DLF project at Mumbai Textile Mills is not estimated to be completed within the next two years.
Gulam Zia,national director for advisory services at Knight Frank,said the predictions for office market have been arrived upon by taking factors like rentals for last several years,supply,occupancy,sentiments and dependency of one market on another into account. The report states that there is 60% vacancy level across office projects that were completed last year.
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The report predicts that Lower Parel will be followed by Malad-Mindspace and Powai which will see a drop of 58% and 57% respectively. Both these areas cater to IT-ITES sector and will have difficulty in absorption of the available office space. They will see a competition from Panvel and Thane where the demand will eventually shift, said Zia. The least to be affected will be Nariman Point which will bottom out at 27% and Fort/Ballard Estate at 41%. The resistance to rental decline has been attributed to the absence of any new supply in these areas.
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