MARKETBEAT

OFFICE SNAPSHOT

MUMBAI, INDIA
Q2 2014
A Cushman & Wakefield Research Publication

ECONOMIC OVERVIEW other submarkets continued to be quoted in a similar range as the

India gave mixed signs amid hopes of previous quarter.
recovery. The estimated GDP growth rate
OUTLOOK
during the fourth quarter of FY2013-2014
was recorded at 4.6% while the yearly GDP Healthy upcoming supply, net absorption expected to
growth was noted at 4.7%, higher by 0.2 improve. New supply of 1.2 msf is expected to become operational
percentage point than the preceding year.The in the third quarter of 2014 in micro-markets like Vikhroli and Kurla.
construction sector grew by 0.7%, in line with the 0.6% growth noted With a new, stable government at the center and improving economic
during the previous quarter. However, the financing, insurance, real sentiments, transaction activity is likely to improve in the coming
estate and business services sector noted a 12.4% growth, lower by quarters. Rental values are expected to remain stable across
1.7 percentage points on a quarter-on-quarter basis. The Reserve submarkets in the next quarter.
Bank of India, in its bi-monthly monetary policy review in June 2014,
maintained status quo on key policy rates as the retail inflation STATS ON THE GO (GRADE A)
measured in terms of the Consumer Price Index (CPI) inched higher Q2 2013 Q2 2014 Y-O-Y 12 MONTH
in March and April consecutively, and recorded at 8.6%, driven up CHANGE FORECAST
mainly by higher food prices. Overall Vacancy 22.1% 20.3% -1.8%

The Indian economy is expected to witness a higher GDP Net Asking CBD Rents 275.44 255.29 -7.3%
(INR/sf/month)
growth rate of 5-6% in FY2014-2015 due to significant
improvement in investors’ sentiments, post the emergence of a single- YTD Net Absorption (sf) 2,356,100 1,686,700 -28.4%
party majority in the Parliament after almost three decades. It is
anticipated that the new government will take firm decisions on big-
NET ASKING RENTAL VS. VACANCY RATES (GRADE A)
ticket reforms that will considerably improve the business
environment, leading to higher economic growth. 350 24%
20%
INR/sf/month

OFFICE MARKET OVERVIEW 300

16%
Net absorption increased as IT-ITeS companies expanded 250 12%
footprint. Mumbai witnessed a net absorption of approximately 1.2 8%
200
million square feet (msf) during the second quarter of 2014, the 4%
majority (88%) of which was in grade A developments. Pre-committed 150 0%
2009 2010 2011 2012 2013 Q1 Q2
absorption by an IT company at Thane-Belapur Road pulled up the net
2014 2014
absorption levels, which increased 55% quarter-on-quarter. Net
MUMBAI CBD NET ASKING RENTAL RATE MUMBAI SBD NET ASKING RENTAL RATE
absorption was concentrated in the submarkets of Thane-Belapur MUMBAI CBD VACANCY RATE MUMBAI SBD VACANCY RATE
Road (44%), Andheri-Kurla Road (15%) and SBD (9%). The IT-ITeS
sector (52%) contributed significantly to the transaction activity
during the quarter, followed by pharmaceuticals (10%), banking, PRE-COMMITMENT VS. NET ABSORPTION (GRADE A)
financial services and insurance (9%) and manufacturing (7%) sectors.
6,000
Increase in supply led to rise in vacancy levels. Overall supply
5,000
sf (thousands)

during the first quarter increased by 76% and was recorded at 1.8 msf,
2,669

4,000
97% of which was in grade A developments. Supply was concentrated
1,687

3,000
1,513

1,026

in the micro-markets of Goregaon (38%),Thane-Belapur Road (34%)

940

2,000
450
804

and Worli (17%). Healthy levels of new supply resulted in vacancy

5,748

4,744

5,282

5,670

4,513

1,000
levels increasing by 0.6 percentage point to 20.3% at the end of the
0
second quarter. 2009 2010 2011 2012 2013 YTD 2014

Rentals in CBD declined. Lower demand for space and

PRE-COMMITMENT NET ABSORPTION
competitive pressures resulted in grade A weighted average rentals
declining 4% in the CBD for a second quarter in a row. Rentals in all
 MUMBAI SELECT MICRO MARKET STATISTICS
SUBMARKET INVENTORY OVERALL YTD LEASING UNDER YTD YTD WTD. AVG US$ EURO
VACANCY ACTIVITY CONSTRUCTION CONSTRUCTION NET ABSORPTION RENTAL RATE (INR/SF/MTH)* SF/YR SF/YR
RATE COMPLETIONS 1Q14 2Q14 2Q14* 2Q14*
All Grades**
CBD 10,488,900 9.7% 6,000 0 0 -15,600 220.03 217.22 $43.36 €31.87
SBD 7,123,100 15.2% 136,300 2,788,500 0 136,300 281.85 280.93 $56.07 €41.22
Worli 3,832,200 14.8% 42,400 512,000 300,000 26,400 198.27 217.99 $43.51 €31.98
Lower Parel 10,315,600 15.8% 394,100 1,056,000 250,000 313,600 156.63 155.80 $31.10 €22.86
Andheri-Kurla 23,325,400 14.6% 201,500 5,990,300 0 201,500 106.74 106.69 $21.30 €15.65
Powai 6,127,700 6.1% 74,000 154,000 0 3,500 87.17 87.30 $17.43 €12.81
Malad/Goregaon*** 14,680,900 21.5% 72,200 974,300 860,000 72,200 85.94 86.00 $17.17 €12.62
Vashi 3,740,500 18.2% 72,000 0 352,000 72,000 64.90 64.89 $12.95 €9.52
Thane-Belapur Road 15,179,000 25.4% 725,500 4,187,800 610,000 725,500 42.17 42.19 $8.42 €6.19
Thane 6,225,800 24.0% 50,000 1,266,800 210,000 50,000 43.70 45.00 $8.98 €6.60
TOTALS# 114,251,700 17.2% 2,095,000 23,169,400 2,823,300 1,906,400 111.51 110.02 $21.96 €16.14

GRADE A
CBD 1,962,800 12.3% 6,000 0 0 -15,600 265.18 255.29 $50.96 €37.46
SBD 5,890,900 16.9% 136,300 2,788,500 0 136,300 285.12 285.30 $56.95 €41.86
Worli 1,115,000 39.3% 16,400 372,000 300,000 16,400 230.26 230.09 $45.93 €33.76
Lower Parel 7,170,200 16.7% 303,900 926,000 250,000 258,900 160.42 160.10 $31.96 €23.49
Andheri-Kurla 9,081,100 19.8% 142,000 3,743,000 0 142,000 110.25 110.25 $22.01 €16.18
Powai 5,877,600 6.2% 74,000 0 0 3,500 95.30 95.00 $18.96 €13.94
Malad/Goregaon 9,407,700 25.0% 42,200 765,000 680,000 42,200 90.20 90.29 $18.02 €13.25
Vashi 1,619,500 34.5% 42,000 0 202,000 42,000 65.00 65.00 $12.97 €9.54
Thane-Belapur Road 11,114,100 23.7% 725,500 3,384,180 550,000 725,500 43.37 43.43 $8.67 €6.37
Thane 4,336,000 25.2% 50,000 550,000 210,000 50,000 45.34 47.14 $9.41 €6.92
#
TOTALS 65,362,400 20.3% 1,823,800 17,948,700 2,433,300 1,686,700 121.60 120.90 $24.13 €17.74

*Reflect weighted average, warm shell asking rental rates that includes core facility, high-side air conditioning and 100% power back-up
**All Grades - includes all Grade A and select properties of other grades in prime office micro markets
#Total figures contain additional submarkets not mentioned above
***Changes in inventory account for removal of stock unavailable for leasing due to outright sale
Conversion rate: US$ 1 = INR 60.12 and Euro 1 = INR 81.79
CBD – Ballard Estate, Colaba, Churchgate, Fort & Nariman Point
SBD – Bandra-Kurla Complex.
Net absorption refers to the incremental new space take-up; renewals not included in leasing activity statistics
IT-ITeS denotes Information Technology and Information Technology enabled Services
Numbers for the second quarter are based on market information collected until 10th June 2014

MARKET HIGHLIGHTS
Significant Q2 2014 Lease Transactions
BUILDING SUBMARKET TENANT BUILDING CLASS SQUARE FEET
The Capital SBD Pfizer A 84,000
Lotus IT Park Thane TCS A 50,000

Significant Q2 2014 Construction Completions

BUILDING SUBMARKET TENANT BUILDING CLASS SQUARE FEET
Birla Aurora Worli - A 300,000

Significant Projects Under Construction

BUILDING SUBMARKET TENANT COMPLETION DATE SQUARE FEET
Nirlon IT Park Phase IV Goregaon - Q4 2014 400,000

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completeness of the information contained herein, and same is submitted subject to errors, omissions, change
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Churchgate, Mumbai 400 020 Tel: +91 22 6657 5555 our principals.
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