Office space rentals may go up, says study
You may have to shell out more rent by the end of the second quarter for the office space you may be using for your business. A complete market recovery, marked by revival in rents, increased absorption and reduced vacancy, is likely to occur in most Indian cities by the end of the second quarter, says a recent report on the commercial rental market, titled ‘India Office Q1 2010’, by DTZ International Property Advisers Pvt. Ltd.
“Rentals remained stable in the first quarter but by the end of the period, there were strong signs of strengthening across some micro markets. Rentals are likely to start rising by the middle of 2010,” says the report.
New supply was significantly less than the level recorded during the corresponding period last year, says the study.
“With limited new projects launches and developers being cautious about reviving postponed projects, future new supply should be more in tune with market demand. This is expected to result in a deceleration in vacancy growth by the next quarter,” it said.
For instance, Delhi-National Capital Region witnessed modest new supply, where the total stock increased marginally to 51.4 million sq. ft from 51.2 million sq. ft by the end of the first quarter. The report added that as vacancy eased, there were indications of strengthening prices in Gurgaon and Delhi. Quoted rentals in some cases were revised upwards in the range of 5-10%.
Mumbai, too, witnessed an additional 3.9 million sq. ft of commercial space during the first quarter, taking the total stock in the region to 65.3 million sq. ft from 61.4 million sq. ft in the fourth quarter of the previous fiscal. The report says, “Rentals remained stable in the central and peripheral areas of Mumbai.”
Commenting on reasons for surge in rentals, Anshul Jain, CEO (India), DTZ International, says, “The IT/ITeS sector was the prime driver of office space demand during the first quarter, accounting for a majority of large transactions, including pre-commitments.”
Devesh Chandra Srivastava
Baroda Pioneer makes second equity venture
After a hiatus of around two years, Baroda Pioneer Asset Management Co. Ltd (erstwhile BOB Asset Management Co. Ltd) is ready to make its second venture in equity funds. Back in business, this time it is tying up with US-based Pioneer Global Asset Management SpA. Baroda Pioneer launched its first equity fund, Baroda Pioneer Infrastructure Fund (BPIF), on Monday in its new avatar. The mutual fund (MF) already has a diversified and an equity-linked savings fund—these funds have been around since its earlier existence. This is the second time that Pioneer Investments has entered the Indian MF industry. Earlier it was a part of Kothari Pioneer Asset Management Co. Ltd that was acquired by Franklin Templeton Asset Management Co. Ltd in August 2002.
With its launch, BPIF becomes about the 13th infrastructure fund. It aims to differentiate itself by sticking to the definition of the Association of Mutual Funds of India, the MF industry’s trade body, as to what constitutes an infrastructure themed company. Typically, there are around eight committees set up by various authorities such as income-tax department, Reserve Bank of India, ministry of finance and so on at different points in time that have defined infrastructure. The new fund offer commences on 3 May and ends on 31 May.
Kayezad E. Adajania