Why is Mumbai's Lower Parel luring corporates?

BusinessRuth Saldanha, Bloomberg UTV, YourMoneySite.

Share this article:

Mumbai's Lower Parel - the new corporate hub

Real estate experts say that corporates think now is the time to move into Lower Parel in Mumbai, despite growing concerns that real estate in the area is a bubble waiting to burst.

With Nariman Point's old world charm fading and the ultra-chic BKC becoming unaffordable, many corporates are turning to Lower Parel as the place to set up shop! Ramesh Nair, MD-Western India, JLL, explaned, "Competing locations like Worli, BKC, Nariman Point, we are talking of rentals close to Rs 250-325/sq ft. So lower Parel is a low more cost effective than these other locations"

In 2008, Lower Parel commercial rentals were close to Rs 325-340 per sq ft, which have now crashed over 50% to Rs 150-160 per sq ft. Bigger corporates like Vodafone and Yes Bank have even negotiated deals at Rs 110 per sq ft. Sources have informed Bloomberg UTV that many buildings, including Indiabulls Financial Centre, are negotiating deals at as low as Rs 90 per sq ft. And the rates may stay steady, as there is ample supply!

"Current stock at 9 m sq ft of which 3 m sq ft is vacant. This year we expect another 3 m sq ft to be added to the stock of 9 m sq ft, so by end of this year we expect 12 m sq ft of stock," said Nair.

Competition for Lower Parel comes from the traditional CBD - Nariman Point, which currently costs Rs 275 per sq ft, new kid on the block BKC, which costs over Rs 300 per sq ft and Prabhadevi, which is close to Rs 250 per sq ft. Lower Parel prices are likely to hold, and corporates are happy to move in at lower rates!