Retail & office rentals witnessing a sharp drop

NEW DELHI: For those who thought the worst was it’s pouring bad news for the real estate over, there’s more bad news. The slow- tate industry. In a market where prices down in the real estate sector is far from are moving southwards, over-supply is over. Rather, the worst seems to be knock- the new problem which has come to ing on the door, with retail and office rental prices across the country witnessing a sharp drop.

In fact, current market stats reveal that there has been a drop in both retail and office rental values in the last two months which varies from 25% to 50% in some micro markets such as Gurgaon and Greater Noida, where malls and office space have seen a dip of 25-50%. Overall, the rental rates in cities such as Kolkata, Chennai, Mumbai, Pune and Bangalore have also dropped by 25-30%.

Kishore Biyani, CEO of the Future Group, feels the rentals may see another 25-40% drop. The market is going to witness a 25-40% drop in the retail rentals as all big or small retailers are finding it tough to survive in this very high rental market, Mr Biyani told dential units in prime localities that SundayET.

“Many small-time or vanilla retailers may have to close their shop in this kind of condition. We have changed our business model and are now operating on a revenue-sharing model in malls. Productivity is a key factor for any retailer to operate efficiently in a mall, in case of a leased deal,” he added. Industry sources say initially most malls in the same micromarket had similar rental rates. But as they became operational, the rentals started to get aligned with revenues and footfalls. In the office space, the second quarter of this year witnessed a total supply of 4.3 million sq ft in the NCR region the demand was down to 3.3 million sq ft only.