MUMBAI: A CBRE India Office Market View for Q1 2015 released on Tuesday said Mumbai witnessed an increase of 44% in transaction levels in the first quarter of the year.
"Commercial leasing activity saw a substantial rise across Mumbai during Q1 2015, which may be attributed to the increased corporate occupier interest for back office space from sectors such as Knowledge Process Outsourcing (KPO) and e-commerce amongst others. Front office space demand during the quarter was primarily driven by occupiers belonging to banking/financial services and media firms looking for small and medium sized office spaces in prominent commercial developments," it said.
The report said E-commerce firms leased approximately 15% of the total transacted space in Mumbai during Q1 2015. Mumbai attracted enhanced activity levels from online retailers such as Flipkart, Housing.com, amongst others.
"Rental values across Mumbai remained largely stable during Q1 2015, in line with trends in the previous quarter. Rental values continued to remain pressurized across most micro-markets. The rental outlook for most micro-markets of Mumbai is likely to remain range bound in the short term, due to large anticipated supply addition and existing vacancy pressures. In the medium to long term, however, rentals of investment-grade office space are expected to firm up," said the report.
Said Anshuman Magazine, Chairman and Managing Director of CBRE South Asia, "A significant quantum of corporate real estate space is expected to become available in 2015, predominantly in the decentralized or peripheral locations of leading cities. A large portion of the supply pipeline that was lined up for completion in the first quarter will spill over into the next few quarters—implying that supply risk over the next six months will be high. Most of these supply laden decentralized micro-markets of major cities such as Mumbai will see a supply peak, which might force landlords to turn more flexible towards rental negotiations, ensuring they remain tenant markets. These trends will put retaining tenants firmly at the top of the landlords' agenda in forthcoming months, at least for peripheral locations."