Now's your chance to buy office space at Nariman Point

After slowdown in sales of residential properties, office space in the city witnesses a demand slump; rents in prime areas like Nariman Point are down by over 30 per cent

It's raining bad news for the real estate sector this monsoon.

After the slowdown in sale of residential properties because of a demand-supply gap and talk of a 20 per cent dip in their prices across the board in the wake of the US rating downgrade, it is the turn of commercial properties to be hit hard.

The situation is so bad, say realtors, that office space in prime areas like Nariman Point, which used to command Rs 350-Rs 400 per sq ft on a lease basis, is now available for as little as Rs 250-Rs 275 per sq ft (see box), a drop of more than 30 per cent.

Experts attribute the slump to slowing demand and excessive supply coupled with worsening market sentiment because of the perceived slowdown in the United States.

"In the last few days, the demand for office space on rent has dried up. The supply, on the other hand, is burgeoning.

Rates in Andheri (East), which used to be Rs 130 per sq ft on lease, have now come down to Rs 100.

Commercial space in Goregaon, which used to go for not less than Rs 100 a sq ft can now be had for as little as Rs 70- Rs 75," said Ravi Bhinder, director, Prime Commercial, a real estate brokerage firm.
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"I have an office space available in Nariman point area, which I'm willing to lease out for Rs 250 per sq ft.

Similarly, rates in BKC have come down to Rs 225 in certain places. Both of these prime business areas earlier commanded not less than Rs 350 to Rs 400 per sq ft," said Prakash Rohera of Kkarma Realtors.

"Many builders and owners, who were not ready to negotiate earlier, are now willing to drop prices drastically to let some money flow in because of slowing demand," he added.

Ramesh Nair, managing director (Western India), Jones Lang LaSalle, a real estate consultancy firm, said, "Rents have come down because the city's office property market is in the midst of a major increase in supply.
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It is clear that the current market scenario favours the lessee, and this is an excellent time for corporate houses to relocate to better quality buildings at lower rents and purchase prices.
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The market is expected to reach the peak it had achieved in 2008 only by 2014."