Categorized | Commercial, International

Commercial Real Estate Office Sector in India Will Struggle in 2012

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Commercial real estate analysts are not particularly hopeful regarding the prospects for India’s office market over the next year. They believe that India’s commercial office market will continue to struggle in 2012, with demand dropping and lending standards tightening even further than their current state.

Reduced demand cause by the uncertain global environment will most certainly play a major role in the difficulties faced by India’s office market. Employment growth is expected to drop, and thus, the need for commercial office space will follow suit.

The expected declines in the commercial office real estate sector will benefit tenants, as they will likely have access to more location options. The increase in potential office space options will lead to a reduction in rents in most areas.

The first half of 2012 will likely present the greatest struggles, leading to increased vacancies. The commercial real estate situation in India may improve in the second half of 2012 if the global economy begins to stabilize and show signs of modest growth.

Some commercial real estate sectors will struggle more than others in the first half of 2012. Large offices will likely experience greater declines, though smaller offices will show signs of growth. Older shopping malls will likely falter, particularly those in unfavorable locations. Many of the shopping malls will either have to be redesigned, or will face pending closure.

The potential declines in the retail office real estate market has landlords thinking outside the box with respect to how the generate revenue. Some are considering moving away from standard rentals, and instead using a revenue-sharing agreement as a means of payment from their tenants.

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About Nancy Raven

Nancy is the main writer for the International section of the website. Sometimes she also helps Drew out on the Finance/Mortgage section as well.

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