With mega investment projects still on the slow lane and IT services providers holding back expansion plans, demand for office space has suffered, resulting in slide in commercial rentals in the city by up to 30 per cent.
Realtors dealing in commercial space in the city have been feeling the ‘slowdown pinch’ for past six months- and have been renegotiating rentals in a market which many feel has not matured for commercial growth.
“The supply for office space has clearly outstripped demand- there are not many takers. Big ticket projects which are supposed to revive demand have been hanging fire for many years. IT sector has stagnated. Private engineering colleges are now building their own hostels instead of depending on leased out space. These factors have hurt demand for commercial space, resulting in rentals contracting by 20-30 per cent,” said D S Tripathy, president of Odisha chapter of Confederation of Real Estate Developers’ Association of India (Credai).
Rentals for commercial space in the city range from Rs 20-100 per sq ft, depending on the location. Barring the posh Janpath locality, commercial rentals elsewhere in the city are on the downside, he said.
But the slowdown phenomenon in commercial realty is not confined to Bhubaneswar alone.
“Other major eastern hubs like Kolkata and Hyderabad have also seen a dip. The NCR region is on the wane as well. Only Bangalore and Pune have bucked the slowdown trend, maintaining the growth tempo due to genuine demand. Elsewhere in eastern India, Bhopal and Patna have seen commercial rentals going up but that has happened largely because of supply constraints,” Tripathy said.
“Since the rentals in Bhubaneswar were already on the higher side, comparable to major cities, a correction was anyways on the cards. But any appreciation is not a possibility, at least for next two years. This is the time when the commercial realty market has to stabilize and realtors have to wait before committing themselves to building space,” he added.
Promoters, who have planned exclusive commercial complexes in and around the city, have been playing the waiting game. DLF’s Rs 1,000-crore Infopark project planned in the Infocity area is yet to take off. The project was to create 5.5 million sq ft of office space for large and mid-scale IT players. Similarly, Unitech’s bid to develop a commercial complex over 2.75 acre patch in a prime city location is also yet to see the light of the day.
