 "Mumbai office rentals come down, slips to 10th position among global cities")
Mumbai: The realty sector slowdown and lack of business confidence have brought Mumbai down to the 10thposition this year, among the top 15 global cities, in termsof office rentals, a recent Knight Frank survey reportreleased today said.
The 15 cities surveyed are San Francisco, Madrid, NewYork, Singapore, Sydney, Washington, London, Mumbai, Tokyo,Mexico City, Paris, Hong Kong, Houston and Frankfurt.According to the Knight Frank survey report, Mumbai whichranked sixth among global cities in 2007, slipped to the 10thposition in 2014 mainly due to delayed revival of the Indianeconomy and lack of business confidence.
“Delayed revival of the Indian economy and lack ofbusiness confidence took a toll on the Indian office market.This had led to Mumbai slipping from the sixth to the 10thrank in terms of rental ranking of global cities between2007-14.
“While rental decline has been the primary reason, adepreciating rupee added fuel to the fire,” Knight Frank ChiefEconomist and Director of Research Samantak Das said in thereport.
Among the top 15 global cities, office rentals in Mumbaiare lowest at Rs 250 per square feet per month, compared toLondon and New York which stand at Rs 900 square feel and Rs360 per square feet respectively, the report said.
However, the report claimed that going forward, the city’soffice rentals are expected to grow by nearly 15 per cent overthe next five years due to “improved sentiment,” the reportsaid.
According to the report, current vacancy levels within theMumbai office market lies at 23 per cent, which is thehighest, as compared to the top 15 global cities.However, rental yields within the city’s office market, isthe highest, at 10.3 per cent, as compared to cities likeSydney, Washington and Shanghai, which offer rental yields of6.3 per cent, 6.2 per cent and 6 per cent respectively, itsaid.
“Technology and infotech sectors have been key drivers ofthe take-up of office space in Asia. Financial services andbanking, the sectors which led the pre-global financial crisisboom, continue to be more cost conscious. While there is stilldemand from these sectors, there has been less front or primeoffice demand,” Knight Frank Asia Pacific Head of ResearchNicholas Holt said in the report.
However, in the coming years, financial services andbanking occupiers to return to drive sizeable segments ofdemand, he said in the survey report.
PTI