The current lease rental at Bandra-Kurla Complex (BKC) - Mumbai, India’s premier business district, is likely to come under stress. While MNC’s and foreign banks having their office at BKC have not defaulted on rent ever since the lockdown began, however, start-ups and smaller firms are clearly under stress. Property consultants share that while a few of their clients are now wanting to shift to smaller offices, a few have given notices to terminate their leave and license agreements.
Commercial property owners share that their corporate clients are now asking for more time as they have started delaying rent payments by a month. They concur that the next two quarters will be tough. Real estate experts are of the view that as companies cut cost and retrench employees, the rentals could decrease by 20% to 30%. Anuj Puri of Anarock Property Consultants feel that if the lockdown persists, even corporate may opt to renegotiate the rentals or take calls on whether to occupy the same space or not. Effectively this will lead to empty offices.
According to a report by Liases Foras, a real estate research firm, about 86 mn sft, or 12%, of office space was vacant in the top eight Indian cities before the lockdown began. This, the report says could increase to 32% if the lockdown continues for another four months. If the lockdown continues till September, the vacant office space will be 225 mn sft. The worst affected will be MMR and the NCR, said the report.