By Anumeet Kaur Bisen, CNBC-TV18

The global economic slowdown is impacting rentals on office space. Demand from foreign companies is tapering off and fresh supply is waiting in the wings. Put the two together and rentals are going to fall.

The wait for commercial property rentals to fall could soon be over. The global slowdown has forced new foreign companies to review their India plans. This is expected to bring down the demand for office space, by about 10-12% over the next two to three quarters.

"It's actually time that we admit that this global slowdown is going to impact the commercial real estate market. A lot of these MNCs and large corporations are looking at taking significantly large positions, in office centres in different cities. They are going to say that they don't know if they want to be in this position right now. And they are going to delay their decisions,” said Pawan Swamy, MD- Markets, Jones Lang Lasalle Meghraj.

Sources say that financial institutions like Merrill Lynch and Morgan Stanley, have already put off their plans to take up over 1 to 1.5 lakh square feet of office space in Lower Parel and Bandra-Kurla Complex in Mumbai. And then, there is fresh supply.

A report by JLLM finds that Mumbai and the National Capital Region will see over 62 million square feet of new office space by 2010; Bangalore will see 19 million and Chennai will add 32 million square feet.

Experts say this could result in a fall in office rentals by 10-15% by December. Experts also say that with rentals going down, rationalization will prevail in the market. This will, in turn, pull back the lost interest around the first quarter of 2009.