Mumbai’s office market witnessed 61% increase in H1 2019: Knight Frank report

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Co-working operators took up 0.02 mnsq m or 0.3 mnsqft of office space in H1 2019 and constituted 14% of the transactions by the Other Services sector in H1 2019.

Mumbai’s office market witnessed 61% increase in volume of office space transacted in H1 2019 to 0.43 mnsq m (4.6 mnsqft) from 0.27 mnsq m (2.9 mnsqft) in H1 2018. The Other Services sector, which includes media, consulting, ecommerce, co-working, etc. continued to dominate transaction activity in H1 2019 garnering 39% share of total transactions followed by BFSI at 34%.

Commercial Market Highlights of Mumbai:

• The transaction activity in the Mumbai Metropolitan Region (MMR) office market was strong 0.43 mnsq m (4.6 mnsqft) in H1 2019 registering a growth of 61% YoY.
• There were several large transactions in H1 2019, which involved occupiers from the Banking, Financial services and Insurance (BFSI) segments, Other Services sector and co-working players.
• In H1 2019, new completions dropped by 56% year-on-year (YoY) at 0.18 mnsq m (1.9 mnsqft).
• Only three out of six business districts witnessed addition in supply in H1 2019 – peripheral business district (PBD), suburban business district (SBD) Central and SBD West.
• The SBD Central market has been gaining traction, witnessed 143% YoY growth in transactions in H1 2019.
• PBD had the highest share of transactions in H1 2019 at 31%. SBD West and SBD Central, combined, garnered 50% share of the transactions in H1 2019.
• The Other Services sector, which includes media, consulting, ecommerce, co-working, etc. continued to dominate transaction activity in H1 2019 garnering 39% share of total transactions followed by BFSI at 34%.
• Co-working operators took up 0.02 mnsq m or 0.3 mnsqft of office space in H1 2019 and constituted 14% of the transactions by the Other Services sector in H1 2019.
• Vacancy levels declined by almost 400 bps from 21.5% during H1 2018 to 17.8% during H1 2019. As supply could not keep pace with the transactions for two consecutive periods of H2 2018 and H1 2019.
• Weighted average transacted rentals for the MMR office market went up by 7.8% YoY during H1 2019, as share of the expensive business district of Bandra Kurla Complex (BKC) and off-BKC in transaction activity was higher than it was during H1 2018.
• Central Mumbai witnessed the highest rental growth of 6% YoY during H1 2019, followed by BKC at 5% YoY and SBD Central at 5% YoY.
• The trend of consolidation of space by occupiers continues across the MMR office market. Despite the number of transactions in the same period increasing from 105 to 160, the average size of deals increased from 2,548 sq m (27 ,429 sqft) per deal to 2,700 sq m (29,059 sqft) per deal.

Gulam Zia, Executive Director – Valuation & Advisory, Retail & Hospitality said “The office market has been growing steadily across India with strong record of transactions each successive year. Mumbai witnessed record half-yearly growth in transactions led by occupiers in BFSI and other service sectors. While the city level vacancy remains elevated, we have a scenario where preferred markets in the city have significantly low vacancy level. SBD Central has been witnessing significant growth in occupier interest over the past few years andwould soon join the list of tight supply markets like BKC and Central Mumbai.”