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The Mumbai real-estate
market saw significant price movements in 2005, with prices
of both commercial and residential properties spurting
on heavy demand.
The report notes that an order in favour of the developers
and mill owners will have a positive impact on the market
releasing more supply into an already constrained market.
It will lead to a correction in values, giving a much
needed breather to the consumer.
The first half of the year saw a raft of new companies
lapping up office spaces all over Mumbai, as a result
capital and rental values shot up by 15 per cent across
all micro markets, says a report published by real estate
consultants Cushman and Wakefield.
However, in the second half, availability of quality office
spaces was clearly falling behind demand, which caused
commercial and capital values to spiral by 25-40 per cent,
while rentals went up by 15-20 per cent. Falling vacancy
rates in Lower Parel, Vakola and Kalina led to significant
price rise in these areas.
The outlook for the market in 2006 suggests a further
rise in values as the shortage of quality stock will continue
in the face of increase of rentals by Information Technology
Enabled Services, Insurance, Banking, Finance, Pharma
and Aviation sectors. Select locations in Navi Mumbai
are also likely to see increased leasing from the ITeS
sector.
The Reliance Special Economic Zone, along with two others
is slated to come up 2006, which is expected to increase
supply of quality of office spaces in and around Mumbai.
The residential realty market saw an unprecedented rise
in the price of quality housing over the past 12 months,
with capital values rising between 25-40 per cent over
2004. Lease rentals in the city also saw a rise of 10
per cent while investment in residential property continues
to be an attractive option.
According to the report, capital values in the city are
likely to remain firm over the first half of the New Year
as the next tranche of quality stock is only expected
to enter the market by 2007.
The report notes that as land prices are shooting up in
areas where parcels are getting depleted fast, the developers
are likely to look at a combination of residential, commercial,
retail and hospitality to offset the higher cost of acquisition.
This higher cost of acquisition is likely to be passed
on to the end user eventually, the report says.
by BS Regional Bureau in Mumbai - December 31,
2005
Mumabi
Economic Outlook Report.pdf |
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