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The ongoing transit-related infrastructure improvements are expected to drive the revitalisation of South Mumbai for both businesses and investors, so much so that office rentals in Nariman Point, one of the city’s iconic commercial districts, may increase from the current โน569 per sq ft to โน1,091 per sq ft by 2030, reflecting strong demand for premium office space in the area, a report by Knight Frank titled South Mumbai โ A Renaissance has said.
South Mumbai is projected to add 4-6 mn sq ft of mixed-use office space in the next 6-8 years. Nariman Pointโs rents surged by 52% to โน569 per sq ft from 2018 to H1 2024. It has outpaced rental growth of BKC, where rents have grown by 20%, the report showed.
“Notably, office rentals in Nariman Point, one of the city’s most iconic commercial districts, are projected to see a sharp rise. Top (maximum) rentals in Nariman Point will increase from the current โน569 per sq ft to โน1,091 per sq ft by 2030, reflecting strong demand for premium office space in the area,” the consultant said.
Evolution of office rental trends in Nariman Point, how it compares with business hubs in Bengaluru and NCR
In the early 2000s, Nariman Point was Mumbaiโs premier business hub, with rentals rising steadily from โน200 per sq ft in 2003 to โน550 per sq ft in 2007. However, the global financial crisis and the increasing appeal of Bandra Kurla Complex (BKC) led to a downward trajectory in office rental to โน402 per sq. ft. in 2012.
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By 2018, Nariman Pointโs rental price further depreciated to โน375 per sq ft, significantly lower than BKCโs office rental at โน833 per sq. ft. and NCRโs office rental at โน460 per sq ft.
However, the top rental prices in Nariman Point appreciated to โน569 per sq ft by the first half of 2024, surpassing top rentals of leading central business districts of both Bengaluru ( โน353 per sq ft) and NCR ( โน429 per sq ft).
Between 2018 till H1 2024, top rental rates in Nariman Point have surged by 52%, significantly outpacing rental growth of BKC, where rents have grown by 20%.
In contrast, top rentals in Bengaluru and the National Capital Region (NCR) have experienced a decline, dropping by 4% and 7%, respectively. This increase is not just a recovery from past lows; it also puts Nariman Point ahead of important commercial markets of Bengaluru and NCR, it noted.
โThis rebound is driven by both an increase in demand for premium office spaces in traditional business districts and upcoming infrastructure projects that are enhancing Nariman Point’s connectivity and appeal,โ it said.
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โThe renewed interest in premium office spaces is already reflected in rising property prices. The convergence of enhanced infrastructure and a strong residential market strengthens Nariman Pointโs standing as a premier commercial hub, creating promising opportunities for investors and businesses alike. As infrastructure-driven economic growth continues, we expect more companies to be drawn to the area, contributing to its revitalization and long-term commercial sustainability,โ said Shishir Baijal, chairman and managing director, Knight Frank India.
South Mumbaiโs fresh office supply expected to touch more than 4 to 6 mn sq ft in the next six to eight years
South Mumbai’s new office supply is poised for growth, with projections of over 4 million to 6 million square feet of fresh mixed-use space added in the next 6 to 8 yearsโthree times the supply seen in the past decade.
This upcoming expansion will be fuelled by the redevelopment of vacant land, including parcels owned by the Mumbai Metro Rail Corporation Ltd (MMRCL), Rail Land Development Authority (RLDA), old mills, and unused industrial sites that are now eligible for conversion into modern office spaces.
This anticipated growth in South Mumbai’s office market, coupled with major infrastructure upgrades, could restore the areaโs status as a premier office destination.
While Mumbai has continued to solidify its position as a key office market, South Mumbai has faced challenges in expanding its office space supply. From 2014 to the first half of 2024, South Mumbai added 1.6 million square feet of office space, accounting for 3% of the total office supply in Mumbai during this period.
South Mumbai: Lagging in supply
The limited supply is due to several factors. The high land costs, along with the scarcity of available plots in this prime location, have complicated large-scale commercial developments. Additionally, the existing office spaces, enhanced by renovations and refurbishments, have been sufficient to meet demand over the past decade.
Housing market of South Mumbai
South Mumbaiโs residential market has seen a consistent rise in absorption rates, highlighting its increasing attractiveness as a prime residential destination. Although it represents a smaller portion of Mumbaiโs overall market, South Mumbai real estate is distinguished by luxury properties and high-end developments.ย
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Since 2016, residential absorption in South Mumbai has surged significantly, surpassing 1,000 units by 2023. This growth is especially impressive given the challenging macroeconomic conditions. The region’s share of the overall residential market has steadily climbed, reaching about 1.4% in the first half of 2024, the report showed.
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