On comparing the office space
transactions in 2014 and 2015, the average transacted office size leases across
Bengaluru, Mumbai, Pune and Chennai have increased greatly when compared to the
uncertain times seen in the first quarter of 2014. Ashutosh Limaye, the
national director at commercial real estate Agency in India said that, the
market spirit was really low in the first quarter of 2014, but after the
general elections in May 2014, the market sentiment started improving
gradually, taking the example of Mumbai which witnessed 65% rise in average
deal sizes between Q2 2014 and Q2 2015.
Good time for commercial real estate
Limaye said that, the good days
for commercial real estate are returning, and the number of transactions is
increasing in all the major cities. Pune is leading with an impressive 89%
year-on-year growth in the transacted space per deal, followed by Bengaluru
(78%) and Chennai (67%).
He also said that, occupiers are
not just leasing the larger office spaces, but are also expecting the space to
be on the same floor, because of which the developers are constructing bigger
floor plates.
This being the condition of
commercial real estate, the residential developers like Ansal Plaza Vaishali are under
high pressure and are owing to slow-moving sales and cash flow issues in the
same cities. So, in order to keep the residential prices in a favourable range,
the developers are building smaller apartments instead of lowering the price
across major cities.
In 2015, apart from marketing
tactics like on-spot discounts and flexible payment schemes, it's been noticed
that size of apartments is falling across the major cities in India. Mumbai
stands first in the list of cities that witnessed largest fall in apartment sizes
(5%), followed by Bengaluru, Chennai and Pune with 4%, 4% and 1% respectively.
According to commercial real
estate agency in India, the fall of apartment sizes in Mumbai from 2010 to
present has been 26%. And for the same period, Bengaluru registered a fall of
about 23.7%, followed by Chennai (22.7%) and Pune (7%). Average unit sizes in
Chennai and Pune have been the lowest among all the four cities.
While the configuration remains
the same (2 BHK), the developers have reduced the size and have made it more
compact. The possible reason for developers reducing the size of apartments
might be to better suit the lower spending power of buyers. Also, the urban
buyers these days are willing to live in smaller sized homes that are near to
their offices. They prefer to live in a compact house that is equipped with all
the basic amenities instead of spending hours of time in traveling.
The developers can think of
changing the apartment sizes prior to the completion of foundation without any
hassles, as price correction is market-driven. This can definitely be a good
move for developers, as they will be able to reduce the price and keep the
configuration unchanged.