'Indian cities see beginning of oversupply issue'

Mumbai, May 26: Most cities in India are seeing the beginning of an oversupply situation that will continue in the short to medium term, according to a study released by global property advisers DTZ.

The study stated that the Indian A-Grade leasehold office space markets were currently at an all time high, both in terms of the quantum of space leased per annum and the prevailing rental values.

The study, released yesterday, however, observed that this might be an opportunity for all stakeholders to re-examine and reformat their strategy for the real estate sector keeping in mind certain factors.

The study was the first of its kind in the Indian context -- an objective, data-led demand supply analysis of the current state of A-Grade leasehold office space markets in the top seven Indian cities (Bangalore, Delhi Naional Capital Region, Chennai, Hyderabad, Kolkata, Mumbai and Pune).

The city-level demand supply analysis, seen in conjunction with the macro-economic fundamentals, indicated that office space rentals were likely to hit a plateau in the next six to twelve months, said Ankur Srivastava, Managing Director of DYZ India. ''Barring a few exceptions (primarily the CBDs), the oversupply situation will lead to a correction in office rental values,'' he added.

Mr Srivastava said in other terms, this correction in A-Grade office space rental values would not be driven by a lack of demand but due to the oversupply build-up.

UNI