As per a recent JLL report, Mumbai figures amongst the top five cities globally that are expected to witness the maximum addition to their office space stock in the next 18 months. Mumbai figures after Shanghai, Mexico City and Beijing – among 99 cities studied globally. Mumbai’s stock of office space is likely to increase by 14 percent.
The current total of Grade-A offices in the city is 109 mln sqft and a stock of about 16 mln sqft could be added in the next one and a half years as per construction schedules announced by developers. Even after taking into account the possibilty of delays, the supply figure should be around 13 mln sqft, which is also significant.
Interestingly, in this survey covering all office sub-markets in each city, the markets from emerging economies figure prominently in the top 10 list. Shanghai comes on top with 37 percent of its current stock to be added in the next 18 months, followed by Mexico City and Beijing adding 18 percent and 16 percent, respectively.
The other cities from emerging economies that figure in the top 10 list include Sao Paulo (7 percent) and Moscow (6 percent). Cities from mature economies figuring in the top 10 lists are Tokyo, Singapore, San Francisco and London. Tokyo is expected to add 11 percent of its current stock through 2018 followed by Singapore (10 percent), San Francisco (7 percent) and London (slightly less than 5 percent).
While Mumbai’s supply pipeline consists of office projects launched years ago, it remains to be seen whether they would all get constructed over the next 18 months. Also, the supply pipeline could dry up in the existing business districts over the next 2-3 years while a major chunk would come up in the emerging business districts and will, therefore, not help much, says Ashutosh Limaye, National Director & Head – Research, JLL India.
Interestingly, the finalised ‘Development Plan 2034’ has proposed an FSI of 5 for commercial projects in the city in an attempt towards re-densification of centric locations of Mumbai and would better allow further utilisation of premium lands. It, however, has to be very well-planned given the pressure on infrastructure in the city.
On one hand, we have established office districts where the new DP is proposing further densification but the existing infrastructure is not geared towards handling re-densification. On the other hand, emerging business districts that are farther from the city centres have local infrastructure that is better suited to handle further densification, he says.
The DP has also opened up a possibility for older buildings to get refurbished. Some of these buildings would also be able to successfully become grade-A assets and add to the city’s office supply. However, it’s easier said than done as many of the older buildings are strata-sold and to arrive at a consensus among all occupiers would take considerable time. Thus, this would be essentially a long-term supply, not available in the next 18 months.