While there is low demand for retail and residential segments, office space demand as well as rents and capital values remained stable during June
The demand for retail and residential properties across the country continued to remain low during June 2012, says real estate services firm Jones Lang LaSalle (JLL) India. While there is low demand for retail and residential segments, office space demand as well as rents and capital values remained stable, it said in its monthly report.
According to ‘Pulse'’ JLL India's monthly report on real estate, urbanisation along the Delhi-Mumbai Industrial Corridor (DMIC) is expected to merge Ahmedabad, Vadodara and Surat into an important industrial cluster of the country.
“With 24-hour power supply, special investment regions (SIRs), closely knit all-weather roads and proactive government support, Gujarat has definitely evolved as one of the key industrial investment destinations of India,” the report said.
Ahmedabad, with textile manufacturing traditionally as its major industry, is emerging as an automobile-manufacturing hub with the onset of Tata Nano car plant and investments from Peugeot. Ford and Maruti Suzuki are also planning to invest in the city. Vadodara’s economy is driven by the chemicals, petrochemicals, pharmaceuticals and biotechnology industries while Surat is the world’s diamond city with more than 90% of the world’s diamonds cut and polished there.
“This hub will attract large investments given the business-friendly environment created by the DMIC with support from the Gujarat government. The industrial development will cascade to other real estate developments such as integrated townships. Moreover, improved connectivity will allow easy access to the manpower and land needed for industrial setups,” the report said.
Here are the snippets from the JLL India Pulse…
The Bengaluru office market witnessed stable transaction activity in June. Vacancy rates remained almost stable and there were no new completions in June.
Retail: Demand remained sluggish during June. As no new malls were completed and the leasing activity in current malls remained subdued, the vacancy rate remained stable. Retail rents and capital values continued to remain stable over the month of June.
Residential: Demand for residential apartments continued to increase marginally in June. Most of the launches were in Electronic City, White Field and Bannerghatta Road. During June, rents and capital values in residential projects witnessed a marginal rise due to the increased demand in select precincts such as Indira Nagar, White Field and Old Madras Road.
Office: Office leasing continued to remain healthy during June. Vacancy decreased as there was no new office space completion and leasing remained healthy. As occupiers continued to shift their operations towards more affordable locations, SBD and suburb locations observed an appreciation of rents and capital values.
Retail: Chennai’s high streets continued to be the preferred destination for retailers. Rents and capital values appreciated during June. With three more malls in advanced stages of completion, the city’s mall market is likely to witness improved activity in the coming months.
Residential: Residential sales improved in June, boosted by the depreciation of the Indian rupee that triggered NRIs to invest in India again. However, property sales continued to remain subdued with respect to end-user sales. A marginal increase in salaries and a persistently tight monetary policy deterred potential home buyers from making purchases. The appreciation of capital values was largely restricted, while rental values continued to soar, indicating high demand for housing.
Office demand witnessed a marginal improvement, but continued to remain largely subdued. Vacancy declined marginally, as supply also remained low. No new office buildings commenced operations during the month. As the activity in this segment remained modest, rents and capital values remained stable, except for a nominal increase in select precincts, which had vacancy in single digits and minimal available leasable space.
Retail: Retail demand remained sluggish in the capital city as prime malls with quality space, had negligible space available for lease. Rents and capital values in malls continued to remain stable over the month of June as demand remained sluggish. Capital values witnessed a marginal increase in the malls in South Delhi sub-market as they had low vacancy.
Residential: Residential sales remained stable across Delhi NCR in the month of June. However, sales were slower compared to the last two months. Rents and capital values remained stable for most of the residential projects in Delhi NCR region, except for a few projects, which commenced operations recently.
Office: Leasing continued to remain stable in the Hyderabad office market. However, most of these leases were space consolidations. There were no new office project completions in June. Rents and capital values mostly remained stable. As leasable SEZ space has been quickly decreasing in the city, developers have increased rents in SEZ properties in Hitec City and Gachibowli.
Retail: Demand for retail space on high streets continued to remain strong during the month. Malls witnessed slow leasing activity while vacancies remained stable as the malls are mostly fully occupied. Rents increased nominally given growing demand at a few high-street locations. Mall rentals remained stable due to less leasable space.
Residential: Residential sales continued to improve in the city, although at a modest pace. Rents increased nominally in a few precincts such as Hitec City and Kukatpally. Capital values remained stable across the city, except for projects that were in their final stages of completion. New launches in the market were priced higher than the average market price.
Demand continued to remain strong, boosted by an increased number of enquiries. Vacancy rates witnessed a marginal dip in June across all sub-markets, barring Rajarhat. Rents and capital values witnessed a marginal upswing in a few sub-markets.
Retail: Demand maintained momentum in the month of June. Vacancy rates in malls dipped marginally. No new malls were completed during the month and malls rents and capital values remained stable due to restrictive activities.
Residential: Demand for residential units remained stable over the month. Rents and capital values witnessed a marginal upswing across most sub-markets in June.
Office leasing continued to be moderate on the back of stable office space demand in Mumbai during June. Despite there being few new completions during the month, the vacancy rate inched up marginally as compared to previous month’s levels. Moderate pre-commitments in new completions during the month were one of the reasons for this trend. Rents and capital values continued to remain stable in most office buildings in Mumbai. This was largely due to developers encouraging cautious occupiers to execute their real estate plans, amidst uncertain global macro-economic conditions.
Retail: Due to lack of quality malls in the city, retailers’ demands seemed to be polarised towards stand-alone formats, high streets and mixed-use developments. Preleasing activity also rose marginally during the month for the aforementioned reason. Vacancy decreased slightly with no new mall completions in June. There was a borderline increase in rents in the prime retail sub-markets of Mumbai. Capital values also witnessed a revival in some select precincts such as Lower Parel and Malad given a healthy leasing activity in the upcoming malls at these locations.
Residential: Residential sales declined in June primarily in the luxury segment. Select locations in the Navi Mumbai sub-market recorded an increase in rents while the rest of the residential real estate market in Mumbai remained stable. Capital values also remained stable during the month, except in areas such as Kharghar, where they rose marginally.
Demand for office space remained buoyant in June. A majority of transactions were concluded in the eastern part of Pune. Rents and capital values rose in select sub-markets such as Hinjewadi and Hadapsar, which witnessed very low vacancy in most buildings.
Retail: Leasing activity remained sluggish with no major lease transactions being concluded in June. Most existing malls had low vacancy and leasing activity, keeping the rents stable. Low retail activity kept the rental and capital values stable across the sub-markets.
Residential: Demand for residential units remained stable in the month of June. Overall, rents and capital values remained stable. A few projects nearing completion continued to charge premium prices over the other under-construction projects.