Mumbai's office space, among the costliest in the world, has seen a price plunge in the range of 40 per cent since the economic slump began. According to a Jones Lang LaSalle Meghraj (JLLM) global real estate overview of cities in the Asia Pacific, Europe and North America, Mumbai is the fifth most affected in terms of prime office rentals. On top is Moscow, where the dip is 64 per cent from peak levels, followed by Singapore (51%), Hong Kong (41%) and Tokyo (40%).

The report also records a significant correction in capital values of office real-estate space in Mumbai. “Classically all these cities had unaffordable rentals. When the market was booming, companies had no choice but to pick up space at higher rentals which is not the case now. This has led to sharp corrections in the commercial business districts of Nariman Point, Bandra Kurla Complex and also Andheri to some extent,” said Abhishek Kiran Gupta, research head at JLLM.

Though a gradual recovery is expected in the economy over the next few months, the report says it will not have an immediate impact on real estate prices. “Real estate always runs at a lag. While the global economy was hit early last year, the realty market saw the impact only by July 2008. Similarly the recovery process too will take time,” said Gupta.

Prices will continue to fall but not as steeply as initially, he said. For instance, the fall in office space rentals in the last two quarters of 2008 were 10 and 12 per cent but lower in the first two quarters of 2009, 10 and 8 per cent.

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