Commercial rentals recovering

News Posted - 2010-02-11

The latest RICS Indian Commercial Property Survey suggests that rental activity in India has picked up in the fourth quarter with the tenant demand happening across office, industrial and retail spaces. But the increase in supply of built-up space in these segments has contributed to dampening rental expectations.

The report says that confidence in the outlook for rental activity over the next three months has strengthened with the office sector leading the upswing. A net balance of three per cent more surveyors are reporting negative rather than positive rental expectations indicating that rental declines should slow down in the coming months. This, the survey sees as a mark of buoyancy as six months back 44 per cent more surveyors were expecting declines.

Less downbeat

The survey also shows that sentiment in India is less downbeat than other major economies, such as the US, Germany and Japan.

The RICS Indian Commercial Property Survey for the fourth quarter of 2009 shows that tenant demand is rising at a faster pace across all sectors; rents are expected to stabilise in the first quarter of 2010-11; and rise in industrial property rents on lower available space.

Capital values are expected to increase in the first quarter of 2010, says the survey. Also, landlords are cutting back on the use of incentives in the fourth quarter as the balance of power is gradually shifting back to them.

On the supply side, the development pipeline edged up, while available space increased at a slightly faster pace as compared to the previous quarter. Capital values are now rising across all three sectors for the first time in over two years with the biggest rise in the net balance recorded in the retail market. More modest rise were reported in the office and industrial sectors.

According to a press release from RICS quoting Mr Sachin Sandhir, Managing Director and Country Head, RICS India, “The results of this quarter indicate that with improving economic conditions in India, the commercial property market is also getting fortified and moving closer to stabilisation.

Source:The Hindu Business Line 7/2/2010