In Noida, with demand outstripping supply, rental growth has slowed down from 10 per cent to 1 per cent from the first to the third quarter of 2007. “In the medium term, we expect rental values in the NCR to stabilise or soften,” said Verma.

Mumbai: Still strong

In the Mumbai market, however, rentals continue to increase at a robust rate as demand continues to outstrip supply. “We expect to see rentals stabilise in some micromarkets of Mumbai in 2008,” said Verma.

Abhishek Kiran Gupta, senior manager (research) with real estate consultancy Jones Lang Lasalle Meghraj, offered an additional reason why supply has been slow to catch up in Mumbai, besides the traditional constraint, which is lack of land. “The Mumbai Metropolitan Region Development Authority has been considering an increase in FSI. So a lot of builders whose office buildings are near completion are not getting their completion certificates. If the increase in FSI comes through, they will be able to reap a windfall by adding a couple of more floors to their buildings,” he said.

In Mumbai, rental values in all micro-markets increased between January and September 2007, though the rate of increase was lower compared to the corresponding period of 2006. Rental values at Nariman Point, Worli and Lower Parel appreciated by 33-34 per cent between January and September 2007 as demand in these central areas continued to be strong, especially from the banking and financial sector. Rental values at the Bandra Kurla Complex rose 22 per cent between January and September 2007. In recent times, the Bandra Kurla Complex has emerged as a preferred destination for corporates due to the availability of larger floor plates, better quality properties and proximity to employees’ residences.

... contd.