A recent report stating that rentals in the Nariman Point area have been falling steadily has many implications. Though the report says that in the last two years alone rentals have crashed over 20 per cent, experts feel that this fall is bigger and ranges between 20 to 30 per cent.

One of the biggest reasons for the fall of rental rates in South Mumbai is understood to be that new Central Business Districts (CBDs) have come up in places like BKC, Lower Parel, Navi Mumbai, Andheri, Mulund and Thane. So, these areas have offloaded the demand and since new CBDs are available at cheaper rates, companies prefer setting up businesses outside Nariman Point. However, the real estate crash has hit businesses everywhere in the city and even business hub BKC has felt the slump. According to a CB Richard Ellis report, the quarter saw only about 0.1 million sq. ft being sold in Bandra-Kurla Complex, against 0.16 million sq. ft in the June quarter. In the September quarter, the city saw a steep 50 per cent sequential fall in large commercial space leasing. In the March quarter, the fall was steeper at 62 per cent, according to industry data.

However, experts have been warning that this could be the case with the entire city because of the industrial slowdown and negative market sentiment prevailing in the country. Number of sales and lease agreements are going down regularly, beating builders’ and brokers’ expectations even as buyers or tenants observe the wait-and-watch mood. This is putting the real estate market in a tight spot, especially as builders are desperately looking for buyers for their huge unsold inventory.

Speaking to The Asian Age, an expert said, “Even the steepest fall in the rupee could not build confidence in NRIs and hence they preferred to keep themselves away and put every decision on hold of investing in the Indian real estate market. Even now NRIs and prudent buyers are thinking 10 times before investing even a single dollar in the Indian real estate market.”

Ajay Chaturvedi, an expert and CEO of real estate journal Accommodation Times said, “The root cause is bad policies prevailing in real estate and this has been coupled with ensuing elections. Business confidence is going down as the industrial growth rate is dipping. Every firm or company is following downsizing and are not starting a new venture, which ultimately has resulted in least entrepreneurship. And this is why demand for commercial rental is not being generated.”

Anand Gupta, an expert on housing issues said, “The city got an oversupply of commercial premises in the name of I-T parks and this rental crash was expected.”

A senior office bearer of Builders’ Association of India, Mr Gupta added, “This is why there are very few new commercial projects being launched.”

Another expert, on condition of anonymity, said, “Today the real estate market is driven by corrupt politicians, white collar and hard core criminals, and the nexus between builders-netas has rigged the market. And since the land mafia is also playing with its tools and tricks in the market, the scene looks bleak.”