New Delhi: Office rents in Mumbai have fallen in September compared with May, making it the seventh-most expensive market in the world, according to a report by real estate consultancy CB Richard Ellis.
The financial capital of India reached a record second position on the list in November 2007, falling steadily since then. It was ranked sixth in the survey conducted in May.
Office rents in prime business districts fell by around 8% between May and September even though there was no new supply. “Rentals in Mumbai fell primarily because demand had slowed down during this period,” said Anshuman Magazine, chairman and managing director, CB Richard Ellis South Asia. “Demand is now starting to come back while keeping the rentals stable.”
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The survey tracked office occupancy rates in the central business districts of 180 cities. London’s West End emerged as the world’s most expensive office market, followed by Tokyo’s Inner Central and Outer Central markets. Hong Kong and Moscow ranked fourth and fifth, respectively, on the list.
New Delhi moved up two spots from 12th to 10th, not because rents have risen but because they have fallen in other cities, Magazine said.
Office markets are seeing a global decline in occupancy costs. The report said the year-on-year change in prime office occupancy costs of 179 markets showed an average drop of 7.7% over the 12-month period ended 30 September. While London’s occupancy cost was $185 per sq. ft per year (Rs8,603 now), Mumbai’s occupancy cost was $121.11 per sq. ft per year and Delhi’s cost was $88.92.
“While there are signs that commercial real estate values are stabilizing in some markets in Asia and parts of London, underlying property fundamentals are still weak,” said Raymond Torto, global chief economist at the consultancy.