Mumbai to Witness Spurt in Office Rental Growth

As per JLL’s recent Global Real Estate Outlook, Mumbai’s office space occupiers will have to face upward revisions in rents in the coming years. Compared to Q2 2015 when Mumbai’s rental values had bottomed out, the city will now start to see acceleration in its rental value growth from Q2 2016.

The research tracks rents (in local currency) for prime Grade-A office spaces in several cities’ CBDs (or their equivalent) across the globe. It then puts these cities on a ‘rental clock’ representing the cyclical nature of office rents.

In Mumbai, Bandra Kurla Complex is the de-facto CBD. The original CBD of Nariman Point long lost out to newer micro-markets due to the evolving needs of occupiers, which it has not been able to provide.

In terms of future upward pressure on office rentals, Mumbai is in the company of cities like Sydney, Brussels, Paris, Milan, Amsterdam, Madrid, Chicago and Boston. In 2Q15, Mumbai’s place on the rental clock was shared by Paris, Brussels, Istanbul and Washington DC. Out of these five, Paris saw a drastic acceleration in rental value growth while both Brussels and Mumbai marched ahead at a slower pace. Washington DC, however, still remains at the same place as last year. Interestingly, Istanbul is now seeing rental values of its prime office spaces falling.

Market dynamics

Mumbai, being the financial capital of India, has traditionally seen a lot of office space take-up by BFSI players and IT/ ITeS (mostly back-office operations of BFSI firms) in different micro-markets. Moreover, showing faith in India’s economic growth, many occupiers have been in expansionary mode, says Anuj Puri, Chairman & Country Head, JLL India.

In a report last year, JLL had forecast that average city-level rents will continue to rise and that the city and suburbs will move from being tenant-oriented to being landlord-oriented after 4-5 quarters. A tenant-driven market indicates oversupply of office space, falling rents, weak demand and big incentives available to tenants, whereas a landlord-orientated market indicates limited supply of office space, rising rents, strong demand and no incentives for tenants.

As JLL had also pointed out, occupiers will take up spaces in less ideal locations as good buildings at ideal locations will fill up quickly on the back of continued demand. Grade-B buildings in good areas will also see renewed interest from occupiers. If the state government improves connectivity and takes up more reforms, additional land parcels in the peripheral areas would open up for residential development and existing office districts could then see further expansion.

MCHI's property fair begins from Oct 2

MUMBAI: Over 150 developers from Maharashtra and also from other states will display more than 1,500 properties at a four-day property fair slated to begin on October 2 at the MMRDA Grounds in Bandra Kurla Complex.

Organised by the Maharashtra Chamber of Housing Industry (MCHI), the property fair, besides showcasing projects in Mumbai and its metropolitan region, also will have pavilions displaying properties in Pune, Ahmedabad, Nashik, Baroda, Bangalore, Goa, Kochi and Chennai.

Over 22 banks and financial institutions such as ICICI Bank, State Bank, Bank of Baroda, Bank of India, LIC Housing Finance, Axis Bank and HDFC are participating in the property mega fair.

All the properties to be displayed in the expo will have requisite approvals, besides having clear titles and commencement certificates, said Bandish Ajmera, Chairman, MCHI-CREDAI Exhibition Committee.

Projects of Peninsula Group, Tata Housing, Indiabulls, Jaypee Group and Adani Group will be available for property buyers to choose from at the expo, organisers said.

Separate stalls will be there to highlight properties in central suburbs and extended areas and the island city.

MCHI- CREDAI has also developed a ‘virtual property expo’ in which all projects will be displayed online.

BKC - from marshland to hot realty hub

K Ramanathan

From an useless marshland a few years ago to the most sought-after residential and commercial hub in Mumbai, Bandra Kurla Complex (BKC) has come a long way. BKC, as it is popularly known, can be seen as a perfect example of a successfully ‘reclaimed urban land’ in the history of Indian real estate.

Having most modern amenities and with strategic location, BKC has become an extremely valuable site, which has gone from strength to strength since the time it was a marshland embedded in Bandra in west, Santacruz in North, Kurla in the East and Bandra in the West.

Over the years, BKC has acquired tactical importance to most prominent companies of Mumbai as the place became an ideal central business district with glittering and ultra modern office complexes, mixed use buildings and residences for high net worth individuals.

After having dragged all the attention from various quarters, BKC has now emerged as the most preferred destination for foreign consulates and trade offices, says Ramesh Nair, Managing Director - West, Jones Lang La Salle India.

Leading countries have opened their Consulates there with the most prominent ones being the US Consulate, Consulates of Australia and New Zealand and the British High Commission and list is getting extended with more and more countries are planning to open their offices here.

According to data available, over the last one year, the Consulates of Sweden, Belgium and France have also opened offices in Mumbai's showcase residential and commercial location. The main idea behind the largesse transfer of offices by these foreign embassies Mumbai’s CBD to BKC is for more breathing space and convenient location.

Nepean Sea Road and Malabar Hill are the places where some of the consulates have chosen to operate and these sites are residential villas. Even though these places are one of the high profile locations on Mumbai’s real estate landscape, they don’t offer the facilities these establishments need to operate.

Consulates have some specific requirements for a flawless operation of their offices. The first and foremost need is that the precinct should have high standard of fire safety and security measures having minimum two exits from the same floor and one of them preferably should have direct access from the unit.

The consulates also require that their premises should be at least 10 metres above from the ground level. Another important need is that buildings should have high visibility with easy access and robust utility prerequisite. To prevent unauthorized access, the shafts within the building should be suitably secured.

What makes the BKC special among the consulates are its excellent infrastructure facilities and well-regulated traffic around the area, which makes travel less cumbersome.

Located strategically closer to international and domestic airports and Eastern and Western Highways, BKC is also closer to high end residential localities such as Bandra and educational institutions such as The American School of Bombay and Dhirubhai Ambani International School.

Apart from having MCA Club and the Trident and Sofitel Hotels, BKC has become a main attraction because of its ample green cover, hygienic surroundings and open spaces.

Most importantly, the newly launched and completed projects here offer ultra-modern amenities and better car parking spaces. Commercial office projects such as Maker Max City, TCG Financial Centre and Capital are among the prominent ones consulates largely prefer because they have smaller sized units, better safety and security features, high building maintenance standards, energy efficiency with high quality finishes.

BKC Emerging as a Hub for Consulates

Bandra Kurla Complex (BKC) is one of the most amazing feats of reclamation urban renewal in the history of Indian real estate. This is not an insignificant claim for a city which itself was shaped from seven islands by the Hornby Vellard project in 1845.

With strategic location and having most modern amenities, BKC has become the most- sought after commercial and residential real estate locations in Mumbai. This extremely valuable site has gone from strength to strength ever since it was reclaimed from useless marshlands hemmed in by Bandra in the West, Kurla in the East and Santacruz in the North.

Apart from its tactical importance to Mumbai's most prominent corporates, who adopted it as an idea alternate CBD location and shaped its imposing silhouette with glittering, ultra-modern office complexes, BKC has also emerged as the most preferred destination for foreign Consulates and trade offices, says Ramesh Nair, Managing Director - West, Jones Lang LaSalle India, who further adds, “It is already home to the US Consulate, the British High Commission and the consulates of Australia and New Zealand. And the trend is spreading.”

Over the last twelve months, the consulates of Belgium, Sweden and France have also taken up spaces in Mumbai's showcase commercial/residential location. This is in line with the increasing inclination of Mumbai's embassies and consulates to shift to more convenient locations.

Currently, a number of other consulates continue to operate from residential villas on Nepean Sea Road and at Malabar Hill. These locations, though inherently high-profile on the Mumbai real estate landscape, do not offer the kinds of buildings which suit the precise needs of these establishments.

It will be interesting for serious real estate observers to track the relocation trend, which will doubtlessly cause more and more of the city's consulates to find more suitable operating bases in the future. Consulates have specific requirements for the office spaces they opt for:

High standards of fire safety and security, with at least two exits from the floor and preferably one of the fire exits providing direct access from the unit

• The premises should be at least 10 metres above the ground
• High-visibility buildings, with ease of access and robust utility provision
• The shafts within the building should be suitably secured to prevent unauthorized acces
• Key Drivers for BKC’s Increasing Popularity With Consulate
• Excellent infrastructure and regulated traffic
• Proximity to domestic and international airports and  the Western and Eastern Highways
• Proximity to high-end residential areas such as Bandra and the presence of Dhirubhai Ambani International School and The American School of Bombay
• The presence of the MCA Club and the Trident and Sofitel Hotels
• Hygienic surroundings, ample green cover and open spaces (unlike many old projects in other locations in Mumbai)

Finally, and very significantly, the newer commercial projects in BKC offer modern amenities and better car parking ratios. Commercial office projects such as TCG Financial Centre, Maker Max City and Capital are among the most sought-after destinations for consulates, given the availability of smaller unit sizes, the high standards of building maintenance, better safety and security features, high-quality finishes and energy efficient buildings.

Godrej Properties to raise funds through rights issue

Godrej Properties, the realty arm of Godrej group, is planning to raise funds through rights issue. The board will meet on May 9 to consider the issue of equity shares of the company, reports ET.

The company had launched an IPO in December 2009 to raise Rs 468 cr. It had also raised Rs 470 cr last year through Institutional Placement Programme (IPP). This year Godrej has managed to get around Rs 500 cr as debt for its commercial project at Bandra-Kurla Complex in Mumbai.

Godrej Properties focuses on residential, commercial and township developments. Its residential portfolio consists of various types of accommodations. The company's commercial portfolio includes office space catering to blue-chip Indian and international companies; IT parks catering to the requirements of IT/ITES companies; and retail space.

An earlier attempt to raise $100 Mn from Singapore government’s sovereign fund – GIC Real Estate for the project in February last year did not go through as the deal was called off later.

 In April, Godrej Properties announced a new redevelopment project in Chembur, Mumbai; it launched phase III of Godrej Summit in Gurgaon and Godrej Platinum in Alipore, Kolkata. In May, real estate developer signed a development management agreement for a project in Bengaluru.

In this segment, Samruddhi Realty issued 21.7 lakh equity shares for partial repayment of long term loans and DLF raised R750 Cr through issue of bonds for development of its housing and commercial projects.

bC India exhibition moves to Delhi

The bC India 2014, the third international trade fair for construction machinery, building material, mining machines and construction vehicles, will next be held near Delhi, from 15 to 18 December 2014. The move from Mumbai’s Bandra Kurla Complex to the India Expo Centre in Greater Noida will provide a maximum of 170,000 sq m of exhibition space at a purpose-built facility, according to organisers.

The change also represents a new position in the calendar for the event. It had previously been held in odd-numbered years, with the inaugural event taking place in Mumbai in February 2011, followed by the second show in February this year. 

The timing had been criticised by some exhibitors, as it meant the show took place in the same calendar year as the longer-running Excon exhibition, which takes place towards the end of odd-numbered years in Bangalore.

Thomas Löffler, CEO of the show organiser, bC Expo India Pvt. Ltd., said, “We are looking forward to the India Expo Centre as the event venue for bC India. We can offer our exhibitors a total of 28,000 m2 of modern indoor exhibition space and 142,000 m2 of presentation space outdoors. This will help bC India become an even more professional trade platform.”

Amit Gossain, vice president for marketing and business development with JCB, a major exhibitor at bC India said, “It’s good to see bC India shifting to North India, where so far there is no large construction equipment exhibition. The Noida Expo Centre is a good centre for world-class exhibitions and the customers will enjoy the facilities. Being close to Delhi, government buyers will also take great interest in visiting the exhibition.”

bC India is a joint venture between Messe München International (MMI), which organises the Bauma and Bauma China trade shows, among others, and the US-based Association of Equipment Manufacturers (AEM), which is responsible for the ConExpo-Con/Agg event in Las Vegas, US.