Pre-sale of office properties is becoming popular in Mumbai as developers are selling off properties at bulk rates to raise funds for their development.
Most sales take place before start of construction. Pre-sale constitutes as much as 75 percent of sale in residential properties, but in contrast, developers always went in for pre-lease agreements for office spaces. This did this because they expected an upside in prices in future.
Now, hit by the easing in demand for residential properties, they are selling off office properties instead of holding onto them in the anticipation of revival of demand.
Ashok Piramal group company Peninsula Land which is developing 6,00,000 sq feet Peninsula Business Park in Dawn Mills Property in Lower Parel has already sold off to half of the office premises to the corporates, while construction is poised to start.
"We have entered into close to half of the property transactions. We will use the funds for further construction and expansion. There is good demand for properties in Mumbai since barring a few places, nowhere is large-scale office space development happening. Pre sales was happening in residential properties, but now it is happening in commercial properties also," said Rajeev Piramal, executive vice-chairman, Peninsula Land.
Mumbai-based Hiranandani Constructions recently pre-sold 1.6 million sq feet commercial and official space in the last four months in its business parks in Powai and Thane, said company MD Niranjan Hiranandani. Explaining the reason for pre-sale of commercial properties, Akshay Kumar, MD of Park Lane Property Advisors, says, "Need for cash and liquidity issues have made developers opt for sale. They want to hold residential properties, which are facing a slump in demand and where prices have peaked. To bridge this gap, they are opting for bulk sale of commercial properties."
On the supply side also, Mumbai is the only city among the metros facing a short supply of office space.
Source : Business StandardTRaghavendra Kamath, Mumbai << BackTop
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