Mumbai is set to emerge as one of the top five global office hubs to witness maximum addition to its CRE portfolio over the next 18 months. According to research, around 16 million sq. ft. is expected to be added to Mumbai’s total office footprint of Grade-A stock. The country’s financial capital is expected to add up to 14 percent of its current stock by 2019. Mumbai ranks amongst Shanghai, Mexico City and Beijing as the most promising and sought-after global CRE markets.
Projects launched some years ago primarily make up Mumbai’s supply pipeline. And property pundits are hopeful that they would get constructed over the next 18 months. However, most of the supply coming up in prominent micro markets may get exhausted over the next 2-3 years. About 2.5 million sq. ft. of the total supply will come from key office micro markets such as Bandra-Kurla Complex area and secondary business district of Lower Parel and Elphinstone Road. The rest of the supply exceeding 10 million sq. ft. or so will come up in upcoming locations in and around the Mumbai Metropolitan Region (MMR).
In anticipation of the upcoming supply, pre-commitment levels in many prominent micro markets have registered a sharp rise. This is considered a direct indicator of sustained demand and occupiers’ interest in the city’s CRE market. Mumbai has a pre-commitment level of about 17 percent for projects expected in 2019. Moreover, pre-leasing deals are gaining momentum not only for commercial office projects to be completed this year, but also future projects that will see completion over the next two years.
With a steady growth in the number of startups and freelance professionals in Mumbai, co-working spaces have emerged as the hottest trend in Mumbai’s CRE market. International co-working giant WeWork recently signed two new locations in the city, which are set to open in the first quarter of 2018. Apart from WeWork, prominent co-working operators including Innov8, 91springboard and Awfis have also established their presence in the financial capital.
The finalized ‘Development Plan 2034’ for Mumbai has proposed a Floor Space Index of five for commercial space projects and that bodes well for the city as it will lead to re-densification of centric locations of Mumbai and would allow further utilization of premium lands.