Mumbai Office Rentals Lag London, Singapore

After studying law I vectored towards journalism by accident and it's the only job I've done since. It's a job that has taken me on a private jet to Jaisalmer - where I wrote India's first feature on fractional ownership of business jets - to the badlands of west UP where India's sugar economy is inextricably now tied to politics. I'm a big fan of new business models and crafty entrepreneurs. Fortunately for me, there are plenty of those in Asia at the moment.

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Property prices in Mumbai have underperformed in comparison to 15 global cities, says a study by Knight Frank India. Among the cities surveyed, which include San Francisco, Singapore and London, Mumbai has the lowest office rentals at Rs 250 per sq ft per month. Rentals in London average Rs 900 per sq ft per month. Knight Frank expects office rentals in Mumbai to grow by 15 percent in the next five years.

 “The delayed revival of the Indian economy coupled with a lack of business confidence has taken a toll on the Indian office market. This has led to Mumbai slipping from the sixth to the tenth rank in terms of the global cities’ rental ranking between 2007 and 2014. While rental decline has been the primary reason, a depreciating rupee added fuel to fire,” says Samantak Das, chief economist & director of research, Knight Frank India.

There’s more bad news. Present vacancy levels at offices in Mumbai (at 23 percent) were the highest among the cities surveyed. The only place where Mumbai gets high marks is rental yields. At 10.3 percent, they compare favourably to Sydney and Shanghai,which offer yields of 6.3 and 6 percent respectively. In addition, real estate price appreciation in Mumbai’s residential areas has been the least among the cities surveyed over the last five years.

(This story appears in the 17 October, 2014 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)

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