With office rental space set to outstrip demand resulting in a further drop in rentals, India's realty sector might face the problem of plenty, according to a latest report by Jones Lang Lasalle Meghraj. "With the forecast growth of net completions expected to outpace that of net absorption, a significant supply overhang is expected to remain over the next one year," Confederation of Indian Industry (CII) and global real estate services firm Jones Lang Lasalle Meghraj said in a joint report. "This will lead vacancy levels across India, which was 17.2 percent in 2009 to rise to 20 percent by 2010 end," the report revealed. It also mentioned that the commercial lease and rental space in India would witness a low occupancy rate till 2011
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  • That has always been the case with commercial properties. Supply is more than demand. Commercial properties are good only if-
    -U hold them for 6 years or above
    -U utilize them for your own biz consumption
  • Office Rental Shoots amidst High Demand

    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 secondary 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.
  • Pune Witnesses Great Resurgence in Commercial Real Estate Demand

    Sanjay Bajaj, Local Director – Markets, Jones Lang LaSalle India said, “Far ahead of what market pundits have been predicting, the Pune commercial real estate market is already witnessing a great resurgence in demand. The clients I have been in discussion with over the last quarter and definitely interested in growing their portfolios once again, and a few of them have some really impressive growth plans.
    Today’s scenario is a far cry from that of 2009, when the demand for commercial real estate in Pune clearly reflected the weak global market sentiments – absorption levels stood at approximately 1.8 million sq.ft. In sharp contrast, this point of 2010 already shows absorption levels as high 2.3 million sq.ft., and our market researchers are confident that this figure is likely to rise to 3.0 million sq.ft by the end of the year.Too good to be true? I would have thought so myself, but the evidence is in – Pune office space is back with a bang.”
  • Lack of Buyer Interest Affecting Commercial Real Estate Segment- CREDAI

    Residential projects have attracted huge investments across the country in recent years, but many commercial plots in major cities are lying vacant due to a dearth of buyer interest, according to construction industry body CREDAI.
    “While 12 million square feet is lying idle in Chennai, it will be more across the country. Many areas in Hyderabad, Bangalore and Gurgaon are lying vacant in commercial spaces,” Construction Real Estate Developers of India (CREDAI) National Vice-President Prakash Challa said. Noting that the real estate industry saw a slowdown after the sub-prime crisis in the US, he charged the Centre with not taking any steps to revive the industry.
    “If they had taken steps immediately after the crash of the US market, the sector would not have faced this much of a problem… All developers and agencies would have been cautious,” he said. Asked whether there was any positive impact from the government’s intervention after the global economic crisis erupted in 2008, he said, “There are no good developments still in the commercial space front. Only limited investments are coming up.”
    “If the government extends the stimulus package, it will generate employment. But if they withdraw it, then there will be a serious problem. Today, many buildings are sitting idle and every builder has become cautious… They don’t want to commit themselves (by investments in commercial spaces),” he said.
  • Assured Returns.

    I have been seen several ads and notices for bank guaranteed returns for commercial property - upto 12%. How is this possible and what is the catch?
    Are they frauds? Because it seems to contradict the supply/demand situation.
  • Originally Posted by ravishukla
    I have been seen several ads and notices for bank guaranteed returns for commercial property - upto 12%. How is this possible and what is the catch?
    Are they frauds? Because it seems to contradict the supply/demand situation.

    Only if u have cash in hand or bank, go for such plans.basically builder gives interest on your money which he would have given to bank loan which would not have been easy for him to procure.
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    Commercial realty rentals plunge in Mumbai & NCR
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    ‘Commercial realty players to disclose hypothecation’