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The Mumbai Metropolitan Region (MMR) has seen decent new supply and transactions in the last few years and 2018 was no exception. The new commercial real estate supply has been hitting the market in lots and chunks of fresh supply is expected to come in the next 2-3 years. The leasing transactions during 2018 went up by 5 percent as compared to the previous year, according to according to a research report prepared by real estate consultancy Knight Frank.
You are reading: Mumbai Sees Moderation in Rentals Increase in 2018
The was a dearth of new supply in preferred localities and micro markets. This had a dampening effect on the leasing activity. However, large commercial buildings are likely to be competed by the end of 2019 which will boost leasing activity in MMR.
The BFSI (Banking, Financial Services and Insurance) sector took up most of the office space. E-Commerce, media and consulting companies also absorbed part of the new supplies in 2018.
Leasing Volumes
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The year 2018 witnessed total leasing volume of 7.9 million square feet, up from 7.5 million square feet in 2017, registering an increase of 5 percent. However, this is expected to increase over the couple of years as large supply is expected to come in.
Rentals
The rentals in MMR have been going up handsomely over the past few years. However, in 2018 there was moderation in the rental increase. The average rent in MMR stood at Rs 117 per square feet per month in 2018, marginally up from Rs 115 per square feet per month in 2017. This translates into an increase of 1.7 percent in 2018 over the previous year, according to the report.
There was an increase in the stock of commercial real estate in the city in 2018. The stock stood at 141 million square feet in 2018, up from 134 million square feet in 2017.
| 2018 | 2017 | Change Year-On-Year | |
| Average Rent (Rs/sq ft/month) | 117 | 115 | 1.7% |
| Transactions (In million sq ft) | 7.9 | 7.5 | 5% |
| Stock (In million sq ft) | 141 | 134 | 5% |
The vacancy levels for office space stood at 19.6 percent in 2018, down from 20.2 percent in 2017.
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Hot Micro Markets
Central Mumbai localities of Parel, Prabhadevi, Lower Parel and Dadar emerged to be a hot destination for leasing activity. The micro market also saw the highest increase in rentals in 2018.
The perennially hot destinations of Nariman Point, Fort and Ballard Estate saw softening in rental values as these areas lost some of their attraction to new office destinations like Bandra Kurla Complex and others.
The co-working space providers continued to expand at hectic pace in the city and took up large buildings on rent in almost all micro markets of MMR. These players have recorded near 100 percent occupancy.
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Category: Lifestyle
