Encouraged by price correction and lowering of interest rates, the real estate market, after a period of relative inactivity lasting the first few months of the year, witnessed improved levels of activity on the part of retail investors in the residential sector, especially in the low to mid-end housing segment, said experts as well as market analysis reports of the second quarter in 2009. CBRE Market View, India Office, published for the second quarter, said: “Level of enquiries went up and, more significantly, transaction velocity also increased marginally as compared to Q1 (first quarter) of 2009… However with most of the activity confined to smaller format offices, vacancy levels remain high. Most developers deferred plans for launching any new projects, the focus being on deploying the scarce resources on completing projects in hand.”

“The downward trend in rental values seen till now has actually been arrested. We expect them to stay put at the present levels over the next quarter. Depending on location, project and sub-market dynamics, the decline over the past 12 months has been anywhere between 25 to 40 per cent. However, values have remained steady over the last quarter,” Pawan Swamy, Managing Director (Western India) Jones Lang LaSalle Meghraj, said.

“In the current context, however, we are now looking at a significant increase in demand, with multinational occupiers beginning to look more favourably at investments” he added. Increased space availability and comparatively reduced cost of occupation in prime Grade A projects in the Central Business District (CBD) has led to a revival of interest in this location, a situation practically non-existent over the past year. As a result, vacancy levels have come down to the range of 7 to 8 per cent. Meanwhile, rentals in the Secondary Business District (SBD) category have come down by approximately 11 per cent over the last quarter, the CBRE report states. “There has been no significant growth in the IT segment — most of the activity we are witnessing is in the corporate sector, predominantly among multinational companies with multiple offices in the same city. Meanwhile, demand in the residential sector has already made a remarkably fast comeback, and capital markets are opening up,” Swamy said.

Meanwhile, Gurgaon witnessed an increase in transactions assisted by attractive leasing packages offered by most developers. “Companies that had postponed their expansion/relocation decisions are now ready to take advantage of the market and the options available for phased take-up…office leasing volume increased by approximately 3 to 4 per cent in the NCR during the second quarter. Increasing levels of corporate confidence should maintain the momentum in the second half of the year,” reads the CBRE report.

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