The report will provide you a year-end review of the Mumbai office market and the prognosis for 2014. The Highlights of the report are as follows: • The prevailing sentiment in 2013 was one of caution due to uninspiring economic conditions. • Cumulative new leasing of office space in Mumbai in 2013 was 4.76 MN SF • The BFSI and IT/ITeS were the major occupiers accounting for 46% of the total absorption. • In 2014, Landlords will be willing to offer greater incentives, rather than lowering base rentals. • Occupiers holding decisions in 2013 are likely take up new space in 2014 post the national elections hoping for a more inspiring economic trend and improvement of sentiment For More information: Please contact Surabhi Arora | Associate Director | Research Surabhi.arora@colliers.com

1. Mumbai Office Market
Snapshot 2013

2. Mumbai Office Market
Snapshot 2013
Quarter-on-Quarter Absorption
Highlights
2.5
The prevailing sentiment in 2013 was one of caution due to
uninspiring economic conditions. Many Corporates put their
investment decisions on hold, waiting to see how the economic
scenario unfolds, especially in light of the forth-coming national
elections. The decision to take up additional real estate office
space was mostly put on hold; or companies aggressively looked
to bring down their costs by adopting a consolidation strategy.
Cumulative new leasing of office space in Mumbai in 2013 was
4.76 MN SF. This was 21% less than 2012. Absorption decreased
in each subsequent quarter throughout the year, further
confirming the downtrend.
IN MN SF
2.0
•
37% Q-o-Q AVERAGE
FALL IN ABSORPTION
1.92
1.61
•
1.5
1.0
0.78
AVERAGE
ABSORPTION
0.45
0.5
0.0
1Q
Demand
2Q
3Q
4Q
Industry Wise Absorption
Most occupiers that leased new office space did so for two main
reasons:
•
•
Others 14%
Consolidation Strategy and moving towards equal or lower
rents for superior office space
1
Current lease agreement expiring
IT/ITes 25%
FMCG 5%
Media &
Entertainment 6%
In 2013 there were fewer businesses leasing new space for
expansion purposes and fewer still took up space to set up a new
business. Micro-markets like Central Mumbai, Navi Mumbai,
Andheri East, and Western Suburbs together constitute approximately 70% of the total absorption. The BFSI and IT/ITeS were
the major occupiers of new space, together accounting for 46%
of the total absorption of office space.
2
BFSI 20%
Pharmaceutical 10%
Manufacturing 15% 3
Top 10 Transactions of the Year
Client
Developer /
Landlord
HSBC
Nesco
Nesco Group
250,000
Goregaon (East)
1Q
Cognizant
Mindspace SEZ
K Raheja Corp
230,000
Airoli
2Q
ISDI Parsons
One India Bulls Annexe
Indiabulls Real Estate
210,000
Parel
2Q
Barclays
Nirlon
Nirlon
180,000
Goregaon (East)
1Q
Johnson & Johnson
Arena Space
Arena Enterprise
150,000
Andheri (East)
1Q
Clariant Chemicals
Reliable tech Park
Reliable Group
150,000
Airoli
3Q
Walt Disney
Solitaire Corp Park
Satellite Group
125,000
Andheri (East)
1Q
Convergys
Gcorp
Gcorp
120,000
Thane
2Q
Colgate Palmolive
L&T Business Park
L&T Realty
100,000
Andheri (East)
4Q
Tata Group
1
Building Name
Lodha Sim Tools
Lodha Group
100,000
Thane
1Q
Area (In SF)
Mumbai Office Market Snapshot 2013 | Colliers International
Location
Transaction Quarter

3. Supply & Vacancy
The total stock of office space in Mumbai is approximately 110
MN SF. The overall vacancy rate for the city is 15%. However,
some micro-markets such as Andheri, Lower Parel, Malad,
Goregaon and Thane Belapur Road have higher vacancy rate in
the range of 18 to 22%. As a result of dampened office demand,
developers refrained from building new office space. This is
reflected in the reduction of 30% new office supply being added
to the inventory; and also the limited new starts. 70% of the new
supply, in 2013 which was approximately 3.5 MN SF was
concentrated in Andheri-Kurla and Malad-Goregaon stretch.
Due to the limited addition of supply, the vacancy rate has
decreased marginally. Overall Grade A office space available for
fit-out is currently at 7.8 MN SF, which is about 16% less than
last year’s figure of around 9.3 MN SF.
New Supply, Absorption & Vacancy
20%
12
10
16%
8
12%
6
8%
4
4%
2
0
2010
2011
2012
New Supply (In MN SF)
2013
2014 F
0
2015 F
Vacancy (In %)
Absorption (In MN SF)
Rental & Capital Values
There was a marginal 3% YoY decrease in rentals in the CBD and
Lower Parel, around 1% YoY decline in Andheri East and Kalina;
while western and central Mumbai witnessed a marginal
increase of 1% and 2% YoY respectively.
Average Rentals, Captial Trends & Forecast
30000
2014 Prognosis
240
As in 2013, there will be limited new supply added to the stock in
2014. Including deferred projects, the new supply expected in
2014 will be approximately 4 MN SF Most of this supply will be
located in suburban and peripheral micro-markets such as,
Andheri, Goregaon, Malad and BKC. Due to the limited
additional supply, rental values will remain stable in nearly all
micro-markets barring those where vacancy rates are already
much higher than the city's average, like Navi Mumbai and
Thane.
180
22500
150
18750
120
15000
90
11250
60
7500
30
3750
Andheri, BKC and Lower Parel will continue to interest occupiers; however the CBD will continue to lose share due to lack of
availability of large floor plates, infrastructure, and distance
from residential pockets in the city. As in 2013, landlords will be
willing to offer greater incentives in 2014, rather than lowering
base rentals. Numerous clients that have searched for an office
space in 2013 will likely take up new space in 2014 post the
national elections hoping for a more inspiring economic trend
and improvement of sentiments.
2
Mumbai Office Market Snapshot 2013 | Colliers International
FORECAST
210
0
2008
2009
2010
2011
2012
2013 2014 F 2015 F
Average Rental Trends (INR Per SF Per Month)
Average Capital Trends (INR Per SF)
26250
0

4. Primary Authors:
62 countries on
6 continents
United States: 140
Canada: 42
Latin America: 20
195
EMEA: 85
$2
billion in
annual revenue
1.12
billion square feet
under management
Surabhi Arora
Associate Director | Research
+91 124 456 7500
surabhi.arora@colliers.com
Amit Oberoi
National Director I Valuation & Advisory Services
& Research
Sachin Sharma
Assistant Manager I Research
For Office Services:
George McKay
South Asia Director I Office & Integrated Services
george.mckay@colliers.com
Vikas Kalia
National Director I Office Services
vikas.kalia@colliers.com
Technopolis Building, 1st Floor,
DLF Golf Course Road,
Sector 54, Gurgaon - 122 002
TEL +91 124 456 7500
13,500
professionals
About Colliers International
Colliers International is a global leader in commercial real estate services, with over 13,500
Corporation, Colliers International delivers a full range of services to real estate users, owners
and investors worldwide, including global corporate solutions, brokerage, property and asset
management, hotel investment sales and consulting, valuation, consulting and appraisal services,
colliers.com
Copyright © 2013 Colliers International.
ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult
their professional advisors prior to acting on any of the material contained in this report.