Pharmaceutical major Zydus has recently closed INR 1.72 billion deal to buy an 80,000 sq ft commercial office space in Goregaon, Mumbai on the Western Express Highway. According to the sources, the deal price based on carpet area was about INR 21,545 per sq ft. The Company currently has its headquarters in Ahmedabad.(Source – ET Realty,30 March 2017)
Colliers Valuation and Advisory Services View
As many companies are looking to consolidate their offices at various locations, a few of them are opting for outright purchases enabling them with large office spaces at a centralized location in the Mumbai market. As Goregaon is one of the prime markets in Western suburbs, we believe that a few other companies looking for consolidation may opt to buy office spaces in areas with available Grade A supply.
Colliers Research View
Contrary to the residential market sentiments, the increased investor’s interest is evident in the commercial property market. According to market sources, ICICI Prudential Life Insurance Co. Ltd has also recently bought one floor admeasuring 35,000 sq ft in Crescenzo building at Bandra Kurla Complex (BKC) at the rate of INR 40,960 per sq ft. Also the technology major Netmagic has also entered into an agreement with Hiranandani Group and Balaji Group to purchase a building in Chandivali area (Andheri) in Mumbai at a price of INR 3.21 billion.
While premium occupiers continue to prefer BKC to set up their headquarters, western suburbs like Andheri and Goregaon are emerging as alternatives for many due to affordable office rentals, available Grade A supply and necessary infrastructure. The prevailing market rental and capital values in Goregaon micro market are INR 120-140 per sq ft per month and 10,000-12,500 per sq ft respectively for premium Grade A buildings. With average rentals almost 50% lower than micromarkets such as BKC and CBD, Goregaon is one of the occupier preferred business districts in the western suburbs. Proximity to Western Express Highway is also underpinning growth in the area and we foresee Goregaon to attract more occupier interest in the long term.