Real estate analyst Colliers Jardine has forecast bearish trends in the real estate markets for the next 12 months with capital and rental values continuing to slip in all the four metros. It does not foresee a situation of rapid price escalation in the near term as was witnessed during 1994-95.
Colliers said in the current market investors have almost been eliminated and genuine buyers are dominating. Rental values for commercial properties in Nariman Point, Mumbai continue to weaken with effective rentals as low as 100 to 125 per square feet per month. Prime property rentals have also weakened to Rs 210 to 250 per square feet per month.
On the other hand, in New Delhi, effective rentals in Bhikaji Cama Place are Rs 70 to 120 per square feet per month, while in Gurgaon it is Rs 50-75 square feet per month. However, in the prime business area of Connaught Place, the rates are around Rs 150 to Rs 200 per square feet per month.
In Bangalore, effective rentals have declined to Rs 50-70 per square feet per month in key buildings on MG Road, while on Airport Road it is at Rs 30-50 per square feet per month. Corporates are also letting out office space in the traditional residential areas such as Indiranagar and Koramangala.
In Chennai, the effective rentals are Rs 40-80 per square feet per month in Anna Salai, MG Road and Radha Krishna Salai. Colliers said that the prices continue to show a declining trend even capital values of commercial property have been falling. For instance, construction of new buildings in north Mumbai will continue to weaken commercial property capital values in the megapolis, it says.
In New Delhi, the rapid development and supply in Gurgaon will keep prices suppressed with current values being in the range of Rs 4500-6000 per square feet.
In Bangalore, inferior infrastructure has resulted in marking the city as unattractive to foreign corporates. Decreasing demand and depressed conditions have led to a rapid decline in values across the Garden City.
In Chennai, Colliers said 1.10 million square feet of land will enter the market in the next two years leading to a significant decline in values.
In the case of residential properties, the sharp fall in south Mumbai has slowed since the third quarter of 1997. Prices of properties in the suburbs beyond Andheri have witnessed a steep decline of 10 to 20 per cent in the last six months and this trend is expected to continue, Colliers said.
Effective rentals have been reduced from Rs 200 per square feet per month to Rs 150 in the prime areas of south Mumbai. While security deposits still form a large part of lease rentals, Colliers said there is an increase in the number of apartments offered on a rental advance basis.
Capital vaue of residential properties in central Delhi are Rs 5000-Rs 7000 per square feet with extremely limited supply of apartments through private developers.
Gurgaon, with capital values of Rs 1,300-1700 per square feet, is expected to see a marginal drop in prices due to new supplies by Unitech, DLF, Ansals and Rahejas.
Effective rentals in price areas such as Jor Bagh, Golf Links and Sunder Nagar have decreased to Rs 70-130 per square feet per month. Lease structures generally comprise a maximum of 12 months security deposit and 12 months rental advance.
