Around 21 million sqft of new Grade A supply of office space is expected to be added in Mumbai by 2025, increasing the total stock to over 169 million sqft (14% increase). The increase in supply will be predominantly in Navi Mumbai (5 million sqft), Andheri (4 million sqft) and Thane (3.5 million sqft) markets, according to a report “Supply Trends” released by Property Share, a technology driven real estate platform. The report on the office supply landscape is based on data sourced from JLL, a premier real estate consultancy firm.
What does the report say?
The report says at the end of H1 2023, Mumbai’s office market vacancy was 14%, marginally lower than the Pan India vacancy levels of 16%. "Core markets like BKC, Fort, Powai, and institutional markets like Goregaon/Malad showed comfortable vacancy levels below 10% whereas back-office markets like Navi Mumbai/Thane still exhibit elevated vacancy levels," the report added.
According to the report, the city has 9 key micro-markets – Nariman Point/Fort, BKC, Lower Parel, Andheri, Navi Mumbai, Thane, Powai, BKC Fringe and Goregaon/Malad. “The annual supply seen in Mumbai has been around 4.8 million sqft till 2022 and a similar supply level is expected over the next 3 years”, it pointed out.
The report has advised investors to "avoid markets like Navi Mumbai and Thane unless prices are significantly attractive, campus style opportunities arise or there is a long lock-in period remaining on the lease."
Vacancy levels in Mumbai remain stable at 14%
“Historical supply addition in Mumbai in the 4-year period between 2019-2022 was 22 million sqft but vacancy levels (overall city level) have remained stable at 14%. Future supply addition is commensurate with historical supply/absorption and the 21 million sqft of expected supply being added between now and the end of 2025 will not see increased vacancy levels”.
An uptick in 2021, the addition was seen as a spillover of COVID. “Of the total supply of 12.4 million sqft expected to hit the market by 2025, 46% is expected in Navi Mumbai and Thane while 44% is expected in the Western Suburbs like Andheri, Powai and Goregaon/Malad.”
Similarly, non-institutional opportunities in suburbs like Andheri etc are to be avoided due to limited growth prospects. While Investors can consider markets like BKC, it is important to buy larger floors and get good entry points, since the already high capital values could limit value generation potential”, the report said.
Numbers highlighted
- Total stock crosses 169 million sqft (14% increase)
- New Grade A office space (21 million sqft)
- Navi Mumbai (5 million sqft)
- Andheri (4 million sqft)
- Thane (3.5 million sqft)
9 Key micro-markets
Nariman Point/Fort
BKC
Lower Parel
Andheri
Navi Mumbai
Thane
Powai
BKC Fringe
Goregaon/Malad
