Selling commercial space continues to be difficult for realty firms despite a surge in business investment spurred by improved economic conditions.
Commercial property developers have slashed rentals by over 25 per cent in some metros and are seeking security deposit for only 3-6 months versus the earlier practice of 10 months. Chennai-based Shriram Properties, which has 1.6 million sqft of commercial property at various stages of development recently took a 30 per cent cut on rental for a million sq.ft of property. “There are enquiries floating around but the tenants are bargaining hard on the rentals,” said company sources.
“Despite offering 10-12 per cent discounts there are hardly any takers for office space,” say developers. Builders are also offering a rent free period of three months on lease tenures as well as free maintenance of property for 3-6 months.
Mumbai-based Raheja Builders and Lodha Developers are offering free maintenance for six months and a lower deposit. “There is pressure on rates due to oversupply. Clients are looking at best deals on rentals,” said Abhishek Lodha MD Lodha Developers. Lodha plans to develop 1.5 million sft of commercial properties this year.
“Properties which are dependent on the IT companies are seeing slow sales,” said Shah of Marathon Group. The company has 8 lakh sq.ft of commercial property under development of which 3.7 lakh sq.ft will hit the market in the next six months.
Industry analysts say that the ongoing rate of absorption is tepid and is only about 30 per cent of last year levels. In 2009, the off-take stood at 21 million sq.ft office space, as corporate India battled the recession woes. “It is a tenant market and the commercial segment is expected to pick up by the end of 2010, say analysts.
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