Office rental mkt up in India: CB Richard Ellis

While rentals in grade A projects in the central business districts of Delhi increased by 4 q-o-q,Mumbai by 3,Bangalore by 3,Kolkata by 10 and Pune by 4,rentals in Chennai and Hyderabad remained constant when compared to the last quarter.

The report also stated that occupiers are actively looking at options in Secondary Business Districts SBD in Delhi NCR,Mumbai,Hyderabad and Bangalore owing to relatively affordable rents with improved infrastructure and a main city location. The Central Business Districts CBD of Chennai,Pune and Kolkata witnessed substantial increase in enquiry levels and transaction velocity of mid-sized and small office format improved as compared to the last quarter.

Market research and data collected across the 7 cities suggests that a large number of companies are reviving their expansion plans,while demand is also increasing for SEZ office space. This is indicative enough of a revival of demand and the substantial improvement in the market activity across the country. .

According to Anshuman Magazine,MD,CB Richards Ellis,Over the past few months,there has been an improvement in commercial leasing activity primarily due to the revival of expansion and consolidation plans by several corporate occupiers. I believe that overall demand for office space would witness an improvement. I also believe that rental increase will remain in check in the medium term due to ongoing supply.

The report also indicates that there has been a considerable increase in the transaction volume in almost all major metros of India including Pune and Kolkata with Hyderabad expected to witness higher rentals owing to an increase in demand for commercial office space by end of this year.

Some of the major rentals trends as per the findings of the report are:

1. In the NCR Region,companies committed to high rental values prevailing during 2007 opted to renegotiate over shifting out to secondary markets due to location advantage and metro connectivity.

2. Mumbai expects a large supply of office space towards the end of this year. The existing tenants of Central Business District CBD of Nariman Point,continued to evaluate options in the Extended Business District EBD and the Alternate Business District ABD due to good quality construction and infrastructure offered in this location

3. In Bangalore,corporates looking for expansion options within the city limits are readily contemplating the Non CBD micro market of Indira Nagar,Koramangala,Old Madras Road amp; CV Raman Nagar as the most feasible option due to ready availibility of Grade A space,lower rentals,rapidly improving infrastructure and good connectivity.

4. In Hyderabad,since supply in the IT corridor is expected to come only in the second quarter of 2011 and there is limited supply and increasing rentals in areas like Madhapur and HITEC City; hence many IT companies looking for smaller format office spaces may consider areas such as Pocharam and Uppal,as these micro markets have abundant availability of ready supply.

5. In Pune,the Central Business District CBD of MG Road,Koregaon Park,Bund Garden,Kalyani Nagar,Dhole Patil,FC Road and JM Road witnessed slight increase in enquiry and demand levels for small format office spaces. Here again,a lot of corporates are moving within the CBD to more efficient buildings

6. In Kolkata,the Central Business District CBD of Chowringhee,B.B.D.Bag,Park Street and Camac Street witnessed substantial increase in enquiry levels and transaction velocity also improved when compared to the last quarter.