In Q3 2017, the Gross office absorption for Mumbai amounted to only 1.0 million sq ft, making it 4.0 million sq ft YTD, similar to the YTD absorption in the same period last year. We witnessed only a marginal drop QOQ, as 1.2 million sq ft of office absorption was recorded in Q2, 2017. According to Colliers Research Survey, Mumbai contributed only 10% of the office absorption pie, standing below cities like Hyderabad and Chennai.
The central suburbs (Powai, Vikhroli, Kurla) and western suburbs (Andheri, Goregaon) accounted for 39% and 20% respectively, of total absorption. Companies also expanded their footprint in Navi Mumbai and BKC, with a 16% share each, while Central Mumbai (Worli, Prabhadevi) and CBD represented the remaining 9% of gross absorption.
For the last few quarters, supply has sustained demand in Mumbai’s micromarkets and rental values have mostly remained stable. As per Colliers Reserach earlier projections, we expect 9-10 million sq ft (0.8-0.9 million sq m) of new supply by 2020 leading to a 7-8% increase in total stock. Most of this supply will be concentrated in Navi Mumbai, and the central and western suburbs. In addition, a private equity joint venture between Tata Realty and Standard Chartered has bought a 47.5-acre (0.2 million sq m) land parcel in the Thane-Belapur industrial area for INR3.25 billion (USD0.05 billion). The joint venture plans to use the land to build around 6.5 million sq ft (0.6 million sq m) of Grade A office space.
“In Q3 2017, coworking space accounted for 31% of total gross office absorption, followed by engineering and manufacturing companies accounting for 21% share of leasing volume. Banking, Financial and Insurance Services (BFSI), technology & technology enabled services (IT/ITeS), consulting, logistics, warehousing, telecom, fintech and other companies accounted for the remaining 48% share of leasing volume. We expect demand for coworking spaces to strengthen further in Q4, 2017, along with manufacturing, logistics, warehousing, telecom and fintech sectors”, added Ravi Ahuja, Senior Executive Director, Developer Services at Colliers International India.