Residential units to grow 23% in city & Rising demand lifted office rentals

News Posted - 2010-10-09, Last Updated - 2010-10-09

India will need about 240 million sq. ft of commercial property and about 4.25 million units of residential real estate to meet the demand in four years between 2010 and 2014, a study conducted by realty services firm Cushman & Wakefield has said.

About 70% of the total estimated demand for residential units during this period is expected from the mid-range and affordable segments, the study said.

It also estimates demand for retail space of about 55 million sq.ft. with the current over supply, situation likely to stabilise only by 2013. The hospitality sector is expected to see demand of about 78 million room nights during the period.

Around 60% of the total estimated pan-India residential demand by 2014 is expected to be from India’s top-seven cities, with tier-I metros, like the National Capital Region (NCR) and Mumbai, expected to account for around 40% of the total demand, the firm said in a report released on Wednesday.

Mumbai is likely to witness the highest cumulative demand of 830,000 units as well as growth of 23%, followed by the NCR, which is likely to witness a growth of about 20%.The housing sector has seen a rise in demand over the last two to three quarters. However, the supply largely remains constrained due to the slow pace of construction activity during 2009–10. As a result, demand across the top-seven cities is estimated to be three times the supply during 2010–14, it said. Source: MB 8/10/10

Rising demand lifted office rentals

Rentals for office space in top Indian cities are firming up due to increased demand, as per an industry study that suggests revival in one of the few real estate segments yet to come out of a slowdown.

There has been moderate quarterly rise in office rentals across Grade A projects in the central business districts of Delhi (4%), Mumbai (3%), Bangalore (3%) and Pune (4%) with Kolkata clocking the highest increase (10%), according to a report by commercial real estate services firm CB Richard Ellis India.

The study for the three months ended September that covered top office space rentals across Delhi NCR, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata found rentals in Chennai and Hyderabad remained static compared with the quarter ended June.

“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 substantial improvement in the market activity across the country,” stated the report.

There has been considerable increase in the transaction volume in almost most metros, including Pune and Kolkata. Hyderabad is expected to witness higher rentals because of increased demand for commercial office space by year end, added the report. Anshuman Magazine, managing director at CB Richards Ellis said, “Rental increase will remain in check in the medium term due to the ongoing supply.”

In the top cities, occupiers and companies look to shift to s e c o n d a r y markets and alternate locations for several reasons such as location advantage, metro connectivity, quality construction and infrastructure, more efficient buildings and competitive rentals. “It is imperative for developers to take a cautious approach towards rental expectations during this rising yet fragile market,” the report added. Source: MB 8/10/10